China unveils details of economic stimulus plan

Faced with a worsening economic outlook, Beijing unveiled yesterday the details of its four-trillion-yuan stimulus plan.

Minister of China's National Development and Reform Commission Zhang Ping presented the plan, initially announced on November 9, at a press conference in Beijing.

According to Zhang, the plan aims to underpin the economy and spur domestic consumption through higher spending on infrastructure, social services, R&D and environmental protection projects, among others.

45 percent of the stimulus package will go toward the construction of railways, highways, airports and power grids, Zhang told the press.

The package includes 280 billion yuan (31.6 billion euros) in spending on housing and 370 billion yuan (41.8 billion euros) on improving people's living standards and infrastructure in rural areas. A total of 180 billion yuan (20 billion euros) will go to building highways, railroads, and the power grid.

It also includes 40 billion yuan (4.5 billion euros) for health and education programs, 350 billion yuan (39.5 billion euros) for ecological and environmental projects and 160 billion yuan (18 billion euros) for R&D and innovation projects, CRI says.

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The investment intended for environmental projects will not be spent in energy and resource-intensive industries or high-pollution industries, Zhang underlined.

Other measures aimed at stimulating the economy include a fuel tax reform, increasing the government's purchase of crops and creating more jobs.

On Wednesday, the central bank also implemented its biggest interest rate cut in 11 years as part of efforts to cushion the impact of the global crisis.

According to CRI, the two-year stimulus package should add about 1 percentage point to China's growth rate.

The central government, which will supply 1.2 trillion yuan (135 billion euros) of the total stimulus spending, is currently working on determining how local governments will pay for their share of the package.

According to the newest forecasts, China's economic growth is expected to fall to about 9 percent this year, which is nearly two percentage points lower than last year.

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