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September 30, 2009

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Yao defends China's stimulus package

CHINA'S stimulus package goes beyond just infrastructure spending, the chief economist of the National Bureau of Statistics said yesterday, addressing a concern raised by some economists that constructing bridges, highways and other public works projects is a waste of money.

Only about 23 percent of the government's 4 trillion yuan (US$586 billion) program to spur the economy in the aftermath of the global financial crisis is devoted to public works projects, while more than half of the funds are going to community projects such as low-cost housing and rural subsidies, Yao Jingyuan was quoted as saying in the Economic Daily.

The stimulus is part of a larger national strategy, he said.

"The policies are aimed not only at overcoming short-term difficulties, but more importantly, at advancing economic development," he said.

"They should lift the quality and sustainability of China's growth."

Yao said "positive changes" had taken place in China's economy, but they still fell short of a full-fledged recovery. Industrial production accelerated in August, with investment picking up, retail sales stabilizing and consumer price declines slowing.

"Only when we have a correct and comprehensive understanding of the stimulus policies can we make them serve sustainable growth in China," he said.


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