Stimulus spending will help China achieve growth target

Published: 2009/03/23

BEIJING: China's stimulus spending may add as much as 1.9 percentage points to economic expansion and help the government achieve its growth target this year, according to the State Council's research group.

"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," Zhang Yutai, director of the Development Research Center of the State Council, said in a live broadcast from the China Development Forum in Beijing yesterday.

Vice Premier Li Keqiang reaffirmed China's goal of 8 per cent growth at yesterday's forum, saying some industries "have seen signs of recovery."China is targeting expansion in 2009 even as economies from the US to Japan contract. The nation's economy is showing "early

Investment in China rose 26.5 per cent in the first two months of 2009 and bank loans quadrupled in February, indications the government's 4 trillion yuan, or US$585 billion, stimulus plan is starting to feed into the economy.

China's government is battling to boost growth amid tumbling exports, rising unemployment, falling house prices and the risk of higher loan defaults.Gross domestic product expanded 6.8 per cent in the fourth quarter, the weakest pace in seven years.

The economy grew 9 per cent for all of last year.

"China has the potential to further boost domestic spending," Zhu Zhixing, vice director of the National Development and Reform Commission, said at the forum, echoing comments by Premier Wen Jiabao on March 13.

Wen said China has "adequate ammunition" to revive the world's third-biggest economy and can add to its 4 trillion yuan stimulus package at any time.Not everyone shares China's optimism it will reach the 8 per cent target this year. The International Monetary Fund expects growth of 6.7 per cent.The World Bank last week lowered its forecast for China's economic growth this year to 6.5 per cent from a November estimate of 7.5 per cent.

In another development, a commentary said yesterday that the global economic crisis is actually a great opportunity for Chinese exports, as people with tight budgets around the world are looking for exactly the cheap goods China provides.

China's exports tumbled 25.7 per cent in February as the world's third-largest economy felt the full force of the global financial crisis.But the official Xinhua news agency said in a commentary that people with less money to spend would be attracted to just the kinds of products China excels in, namely cheap ones.

"Simply speaking, even though there's a crisis, people still have to get by and there's no escape from consumption," it said."Find out what the market needs, find a market niche and you'll see there's still plenty of room for Chinese products," it added. - Bloomberg, Reuters