China today announced a whopping $570 billion stimulus package to boost domestic demand and a slew of macro-economic measures to ease credit crunch to offset the adverse impact on its economy from the global economic crisis.
Under the package, the government promised to loosen credit conditions, cut taxes and embark on a massive infrastructure spending programme.
The stimulus package estimated at yuan 4 trillion (about $570 billion) will be spent over the next two years to finance programmes in 10 major areas, including low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and disaster relief programmes.
The government move comes amid indications that economic growth, exports and various industries are slowing.
The policies include a comprehensive reform in value-added taxes, which would cut industry costs by yuan 120 billion.
Commercial banks' credit ceilings will be abolished to channel more lending to priority projects, rural areas, smaller enterprises, technical innovation and industrial rationalisation through mergers and acquisitions.
The decision was announced today by the State Council after Premier Wen Jiabao presided over an executive meeting of the cabinet on Wednesday, Xinhua news agency reported.
The meeting decided that credit expansion must be "rational" and "target spheres that would promote and consolidate the expansion of consumer credit".
During the first three quarters this year, China's GDP growth slowed to 9.9 per cent, down 2.3 per cent from the same period last year and falling to single digit for the first time in five years due to the impact of the global economic crisis.
