To invigorate the fizzling economy, the Chinese government is preparing for a "big bang" policy package including injecting more capital into the construction of railways, ports and energy resources and increasing the sales of treasury bonds on long-term infrastructure projects.
The large economic stimulus package will be released after the decision is made at the annual Central Economic Working Conference slated for late November in Beijing, as some officials related to the situation told the Hong Kong-based Wen Wei Po newspaper on Wednesday.
The report mentioned members at the conference will work out how to stimulate domestic consumption and maintain economic growth, and also outline the country's economic policies next year, facing the impending worldwide financial crisis.
With the global financial crisis rippling through the United States and Europe, China's once supercharged economic growth has slowed sharply, dropping from 12.6 percent in the second quarter of 2007 to about 9 percent in the third quarter of this year, according to national statistics.
Falling exports and unstable consumer prices have created big macro-economic challenges for the central government to counter-attack an economic slump, according to the National Development and Reform Commission (NDRC), which has been closely monitoring economic trends.
Some Beijing analysts forecast the economic conference will announce some easing monetary policies and upgrading industry sector standards. Relevant departments, including the NDRC, the central bank, the Finance Ministry and the Commerce Ministry, may also map out plans on taxes, credit and foreign trade.
"Aside from active fiscal policies, the government should cut taxes to lower enterprises' costs and alleviate people's financial burdens, encouraging investment and consumption, the two main engines of the country's economic growth," said economic experts in reaction to a report by the State Information Center, a NDRC research institution.
They also suggested a reasonable allocation of the present market resources in order to promote the upgrade of China's economic structure.
"Under the present economic situation, massive investment in infrastructure construction can stimulate the declining domestic demand and stabilize investment," said Zhang Xiaojing, Dean of the Macro-economic Research Department from Institute of Economics at the Chinese Academy of Social Sciences.
(China Daily November 8, 2008)