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China mulls new stimulus plan|
By Yidi Zhao and Kevin Hamlin, Bl o o m b e r g N e w s March 4, 2009
Chinese Premier Wen Jiabao is considering new stimulus measures, adding to a 4-trillion yuan (US$585-billion) spending plan as the government tries to revive growth in the world’s third-biggest economy.
Wen will announce “a new stimulus package” in his annual address to the nation’s legislature on Thursday, former statistics bureau head Li Deshui told reporters in Beijing on Wednesday. He didn’t say whether spending would increase or give further details.
Stocks rallied worldwide on speculation increased spending will spur earnings after an export collapse dragged the economy to its weakest growth in seven years, costing the jobs of 20 million migrant workers. The C o m m u n i s t P a r t y ’s P o l i t bu r o pledged last month a “massive” increase in government investment this year and Standard Chartered Bank Plc says the package may be doubled.
“The existing stimulus package may not be adequate considering the total collapse of global trade,” said Isaac Meng, a senior economist at BNP Paribas SA in Beijing. “There should be more spending, especially on the social side to cushion unemployment. This is quite urgent.”
The Shanghai Composite Index closed 6.1% higher. Copper futures jumped by the exchange-imposed 5% daily limit in Shanghai on optimism demand may pick up in China, the world’s biggest consumer of the metal. The MSCI World Index added 0.5% at 12:24 p.m. in London and futures on the Standard & Poor’s 500 Index rose 1.7%.
Reporters asked Li, who was outside a meeting of the economic group of the Chinese People’s P o l i t i c a l Consultative Conference, whether China would double or triple the 4-trillion yuan package.
‘New Stimulus Package’
“In Premier Wen’s report on Thursday, there will be an announcement of a new stimulus package,” said Li, also a former member of the central bank’s monetary-policy committee.
China will spend more on infrastructure and to boost manufacturing in addition to the stimulus package announced in November, Reuters reported on Wednesday, citing an unidentified official at the country’s top economic planning agency.
Wen’s speech to the legislative meeting, which starts at 9 a.m. on Thursday, will be the equivalent of a U.S. State of the Union address, setting priorities for the year.