China’s 4 trillion yuan (US$586 billion) stimulus package may contribute between 1.5 percent and 1.9 percent to the country’s economic growth this year, the State Council’s research group said.
The spending will help China realize its target of 8 percent expansion this year, Development Research Center of the State Council Director Zhang Yutai (張玉台) said in a broadcast from the China Development Forum in Beijing yesterday.
“China has the ability to become the first in the world to step out of the crisis and keep stable growth for the mid and long term,” he said.
Speaking at the same forum, Vice Premier Li Keqiang (李克強) also reaffirmed the country’s growth target for this year, saying some industries “have seen signs of recovery.”
The government is hoping the stimulus spending will increase domestic demand and counter a collapse in exports that has led the world’s third-largest economy to its weakest growth in seven years.
“China has the potential to further boost domestic spending,” National Development and Reform Commission Vice Director Zhu Zhixing (朱之鑫) said at the forum.
China has announced a record 950 billion yuan budget deficit this year. The risk posed by the deficit is “under government control,” Vice Minister of Finance Wang Jun (王軍) said at the forum.
Not everyone shares China’s optimism it will reach the 8 percent target this year. The Organization for Economic Cooperation and Development could cut its forecast for the country’s economic growth to as little as 6 percent, secretary- general Angel Gurria said on Friday, while the IMFexpects growth of 6.7 percent.
Four months after China announced the stimulus package, economic indicators are mixed. Investment jumped a more-than-estimated 26.5 percent from a year earlier in the first two months, and bank loans quadrupled last month, while industrial output growth slid as exports plunged by a record.
GDP expanded 6.8 percent in the fourth quarter, compared with 9 percent for all of last year and 13 percent for 2007.