The 4-trillion-yuan stimulus package unveiled by the central government will help the country tide over the global economic downturn, said Yu Yongding, director of the Institute of World Economics under the Chinese Academy of Social Sciences.

"The mainland cannot prevent a global economic recession, but the package can significantly stimulate its domestic consumption," Yu said.

Speaking on the sidelines of an economic forum in Hong Kong yesterday, the renowned mainland scholar said that it is possible for the mainland to achieve a GDP growth of 8 to 9 percent if the measures can spur the annual economic growth by 2 to 3 percent.

Referring to the mainland's steel production decline by 4,700 tons since June, Yu said that the drop reflected the economic slowdown since steel production is one of the key barometers of economic performance.

Meanwhile, the mainland's exports and fixed asset investment experienced a drop in the third quarter.

Yu, however, remained optimistic that impetus of the stimulus package can offset part of the external volatilities, as well as restore market confidence.

"It is too early to assess the effectiveness of the stimulus package at this stage," he said. "In retrospect of mainland economic policies over the previous years, I think they are in the right direction."

However, he urged the mainland government to be aware of potential downside risks of the economy, noting it should not let annual GDP growth there slide below 8 percent lest it will trigger a serious unemployment problem.

In the same meeting, China Development Research Foundation Deputy Secretary General Tang Min said that the stimulus package will help improve the livelihood of the general public, but the change will not come overnight.

Ronnie Chan, chairman of Hang Lung Properties, applauded the stimulus package, saying that it will help not only maintain the mainland's growth momentum but also create more job opportunities.

"I believe the primary initiative of the stimulus package is to safeguard the people's livelihood in order to maintain social harmony," he said.

Chan also said that the impact of the US financial crisis on the mainland would be minimal, as the mainland has not fully opened up its capital market.

Looking ahead, Yu said that the mainland should steer its economy away from export- and property-denominated growth.

"The mainland can hardly keep its growth momentum for the long run by solely relying on fixed asset investment and the property sector," he said.

(HK Edition 11/26/2008 page2)