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New stimulus ready if figures fall

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

The 4-trillion-yuan package that the government launched last November won't produce results in a short term, so the economic figures for the second quarter will be crucial to show whether more stimulus measures are required, said Jia Kang, head of the 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 today.

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

Chinese Premier Wen Jiabao said earlier this month that the country is fully able to add new measures to its 4-trillion-yuan stimulus package.

"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.

A senior researcher from the State Council said on Sunday that China will be able to recover from the global recession ahead of other countries with appropriate measures.

"With confidence and effective measures, China has the ability to be the first to recover from the financial crisis and keep a fast and stable growth in the mid and long term," said Zhang Yutai, director of the Development Research Center of the State Council, at the China Development Forum in Beijing.

Zhang estimated the 2-year package could contribute 1.5 to 1.9 percentage points to the country's economic growth this year.

"The 4-trillion-yuan package, the 500-billion-yuan tax reduction and stimulus measures in 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 falling exports.

Wang Jun, Vice Minister of Finance, said at the forum that China has plenty of ammunition to handle more difficult situations such as the huge potential of the domestic market and more than US$1.9 trillion in foreign reserves.


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