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Additional stimulus in the pipeline

(China Daily/Xinhua)
Updated: 2009-01-03 08:33

The nation's economic stimulus measures will go beyond the announced 4-trillion-yuan package as more industry-specific policies are rolled out, Premier Wen Jiabao said on Friday.

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The government is refining and augmenting the package, because it was "rather preliminary" when announced on Nov 9, he said.

During his visit to Qingdao, a manufacturing and export hub in Shandong province, the premier said that the government is working on "a basket of measures" to prevent the economy from an excessive slowdown.

A number of industry-tailored policies are in the making, and two of them, for the auto and steel industries, have already been drafted, Wen said without elaborating.

The 21st Century Business Herald reported in the middle of last month that the government was drafting measures to bolster nine industries which account for one-third of GDP. They include the auto, steel, textile, equipment machinery and shipbuilding sectors.

Wen on Friday also called for early implementation of medium- and long-term plans related to science and technology.

"All such plans, if strongly related to economic development, should be expedited," he said.

Striking a note of confidence, Wen said the country's vast market, abundant labor resources, sound financial system and adequate liquidity would help it tide over the global financial crisis.

In recent months, the authorities have announced a slew of macro-economic policies - including aggressive government spending, tax rebates and interest rate cuts - in the hope of raising domestic consumption at a time when sagging global demand is crippling its traditional growth engine, exports.

GDP growth slowed to 9 percent in the first three quarters of 2008 as a result of the financial crisis, compared with 11.9 percent for all of 2007.

Exports slid 2.2 percent year-on-year in November, the first monthly decline since June 2001, and fiscal revenues recorded their first monthly decrease for 12 years in October.

With more stimulus measures in the pipeline, economists believe the country's economy would pick up steam in mid-2009 with full-year growth exceeding 8 percent.

"The stimulus measures are likely to pay off in the second quarter of this year," said Li Jing, chairman of China Equities, JP Morgan Securities.

Zhang Yansheng, head of the international economy research institution affiliated to the National Development and Reform Commission, said rising domestic demand in the second half would cushion the impact of plunging exports as macroeconomic measures and stimulus packages take further effect.

Li Yang, director of the Institute of Finance and Banking affiliated to the Chinese Academy of Social Sciences, said the economy would shake off the impact of the global economic turmoil and resume rapid growth in the second half.

According to the central economic work conference held last month, rural consumption and spending on housing, cars, services and tourism would be the focus of efforts to boost domestic consumption.

Yi Gang, deputy governor of the central bank, said he expects domestic enterprises to draw down inventories by the end of the second quarter and purchase new production goods, which would be a signal of recovery.