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China's 8% GDP target can be met via stimulus

CONDITIONS are favorable for China to achieve the 8-percent economic growth target it set for this year, Zhang Yutai, president of the Development Research Center of the State Council said in Beijing yesterday at the China Development Forum 2009.

Zhang's conclusion was based on the 4-trillion-yuan (US$586 billion) economic stimulus package, the 500-billion-yuan tax cut and support plans for 10 key industries. These would help boost the economy, he said.

According to preliminary statistics, the 4-trillion-yuan stimulus package was expected to contribute 1.5 percent to 1.9 percent to economic growth this year, Zhang said.

The country's gross domestic product rose 9 percent last year. The Chinese government has set an 8-percent GDP growth target for this year.

However, the World Bank last Wednesday cut its forecast for China's economic growth this year again to 6.5 percent from 7.5 percent. It projected a 9.2-percent growth in November.

China's economic development was facing three major challenges - the global financial crisis, periodical economic adjustment and extensive economic growth model, Zhang said.

Beginning late last year, the government announced aggressive measures to ease the domestic impact of the global downturn. These included a 4-trillion-yuan stimulus package, a plan to expand rural home appliance purchases and support plans for key industries.

These measures were timely and decisive, and had helped boost market confidence, said Stephen Green, HSBC Group Holdings chairman.

"There is great potential in domestic demand, which is a powerful engine to boost China's economic development," Green said.

Vice Finance Minister Wang Jun listed five key aspects where an active fiscal policy could be carried out to enlarge domestic demand - governmental spending, income rise, improvement on living standards, technology innovation and energy saving.

To expand government investment in national key construction projects was a most active, most direct and most efficient measure to stimulate demand, Wang said.

Another measure was to reduce financial burden on companies and residents through tax cuts, rebates and fee exemptions.


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