Beijing agrees on 4 trillion yuan measures to boost demand
The mainland has approved a 4 trillion yuan (HK$4.5 trillion) stimulus package up to 2010 to boost domestic demand, a therapy to counter the sharp economic slowdown amid the global financial crisis.
'The investment expansion should be done swiftly and forcefully,' a State Council meeting chaired by Premier Wen Jiabao stressed yesterday.
The announcement came after China, the world's fourth largest economy, was singled out by the World Bank and officials from the Group of 20 nations as an important player to kickstart growth when they met in Brazil yesterday.
The stimulus package taps 10 areas, where government spending will support budget housing, rural and key infrastructure construction, medical system improvements, environmental protection, industrial innovation and raising people's incomes, Xinhua reported.
Officials also agreed to expand a pilot value-added-tax reform scheme to all industries nationwide. This is expected to reduce 120 billion yuan of tax payments by companies each year, while loan quota controls imposed by the central bank to commercial lenders would be scrapped to encourage lending to support key government projects, agriculture and small and medium-sized companies.
In addition, Beijing would invest an extra 100 billion yuan from central government funds in the fourth quarter. It had also brought forward 20 billion yuan from next year's budget for earthquake reconstruction, Xinhua said. This will bring total investment for the fourth quarter to 400 billion yuan.