World financial crisis

China announces 458 billion euro stimulus plan

Article published on the 2008-11-09 Latest update 2008-11-10 09:57 TU

A Chinese trader in Beijing.
(Photo: Reuters)

China unveiled a four trillion yuan (458 billion euro) economic stimulus plan Sunday to boost domestic spending and compensate for flagging international exports amid the deepening worldwide financial crisis.

The measures, approved by Premier Wen Jiabao on Wednesday but reported Sunday by state media, would commit funding for investments in infrastructure projects and business tax cuts. The plan would spend the funds from now until the end of 2010.

“China has decided to adopt an active fiscal policy and moderately easy monetary policies to foster fast but steady economic growth by expanding domestic demand," said a statement posted on the Cabinet's website.

The financial crisis has slackened overseas demand for Chinese manufactured exports – the backbone of its economy – and slowed the country’s growth to nine per cent in the third quarter of this year, the lowest in five years.

This is the latest step in China’s efforts to curb the damage the international financial crisis has had on its economy, which is largely insulated from the banking and credit crunches at the heart of Western countries’ worries.

The Chinese central bank has already cut interest rates three times since September, and the Cabinet recently approved a two trillion yuan (229 billion euro) plan to build new railroads.

The new spending will focus on large infrastructure projects like highways, railroads, airports, power grid upgrades and the agricultural sector, said the report published on the Cabinet’s website.

The report also mentioned increased investment in education and health care, though it gave no breakdown of the numbers.