Official offers details on $586B stimulus package

(Xinhua/Agencies)
Updated: 2008-11-14 13:26

BEIJING -- A senior Chinese planning official told reporters here on Friday that the new 4 trillion yuan ($586 billion) economic stimulus package includes 1.18 trillion yuan from the central government through 2010.

Mu Hong, vice director of the National Development and Reform Commission (NDRC), said the agency would add 100 billion yuan of new investment during the fourth quarter.

The central government's investment, combined with that of businesses and local governments, would bring the total spending to 4 trillion yuan by the end of 2010, he said.

"The 4 trillion yuan is only part of the country's total investment. It is not the total," Mu said.

Officials have said that a "large part" of the total package was new money, but they have not provided specific figures.

The stimulus package was announced on Sunday amid rising concern about a sharp slowdown in the world's fourth-largest economy. China's gross domestic product grew 9 percent annually in the third quarter, down from 10.1 percent in the second quarter and 10.6 percent in the first quarter.

"To boost domestic demand has become the priority of current economic work," Mu told reporters. He added the package would stimulate both short- and long-term demand, as it would spur economic growth while transforming the type of growth.

Weakness in China's economy is worsening and the government faces a severe challenge as it tries to avert a sharp downturn, as new data showed investment growth cooling.

"The downturn trend in our economy is more obvious, especially since September. We hope a rapid downturn in growth will not occur," Mu said.

Mu expressed confidence Beijing's multibillion-dollar stimulus package would help the country weather the global downturn. But he said, "This international financial crisis is a new challenge for us. It is a severe challenge."

Chinese President Hu Jintao is due to attend a Washington meeting of world leaders this weekend to discuss a possible response to the crisis.

A deputy governor of the People's Bank of China, the central bank, speaking at the news conference with Mu, said Beijing has a "responsible attitude." But he said the stimulus is the most important step Beijing can take for global stability.

"We have worked to stabilize the growth of China's economy. We believe this will be our biggest contribution to the international response to the financial crisis," said the official, Yi Gang.

China's economic growth fell to 9 percent in the latest quarter after a stunning 11.9 percent expansion last year. Exporters say foreign customers are canceling orders, which has led to layoffs and factory closures.

Mu blamed the weakness on the global downturn. But data released Friday showed domestic investment -- a key force driving China's rapid expansion -- is also cooling as companies cut back or put off spending on real estate, factories and other assets.

Investment in assets grew by 27.2 percent in the first 10 months of this year over the same period of 2007, the National Bureau of Statistics reported. That was down from the 27.6 percent growth reported for the first nine months of the year. Such investment is estimated to account for one-third of China's economic growth.