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New stimulus package dependent on Q2 data

CHINA may launch a new stimulus package if economic figures for the second quarter of this year are below expectations, said a senior official at the Ministry of Finance.

The 4-trillion-yuan (US$585 billion) package that the government launched last November won't produce results in the short term, so the economic data for the second quarter will likely indicate whether more stimulus measures are required, said Jia Kang, head of the Research Institute of Fiscal Science at the ministry.

"The second-quarter economic figures can be estimated as early as June," China Securities Journal quoted Jia as saying yesterday.

Jia suggested more government-backed financing measures in the new package to support the rural economy and smaller companies, and he also encouraged more public spending to help spur the economy.

Chinese Premier Wen Jiabao said earlier this month that China is fully able to launch new measures on top of the package already unveiled in November.

"We have prepared contingency plans against the financial crisis and have 'adequate ammunition' to face more difficult times, and we are ready to introduce new measures to stimulate the economy at any time," Wen said at a briefing in Beijing.

China is able to recover from the global recession ahead of other countries with appropriate measures, said Zhang Yutai, director of the Development Research Center of the State Council, at the China Development Forum in Beijing on Sunday.

Zhang sees the two-year package contributing 1.5 percentage points to 1.9 percentage points to China's economic growth this year.

"The 4-trillion-yuan package, 500-billion-yuan tax reduction and stimulus measures on 10 key industries will help the country achieve an 8-percent economic growth this year," Zhang said.

However, the World Bank last week cut its forecast for China's economic growth in 2009 to 6.5 percent from 7.5 percent as a result of shrinking exports.


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