SHANGHAI — Potentially providing an important lift to a faltering global economy, China unveiled plans Sunday to pump about $586 billion into infrastructure projects and other stimulus measures to bolster domestic demand and shore up its weakening economy.
The massive two-year stimulus package, which one analyst described as China's version of America's New Deal, represents one of the most aggressive actions to date by a country to counter the effects of the global financial crisis.
It comes as China's president, Hu Jintao, prepares to join President Bush and other world leaders Saturday for a global economic summit in Washington. President-elect Barack Obama has called on U.S. lawmakers to take swift action to pass a stimulus package as well.
During the summit, leaders of major economies are expected to discuss a coordinated fiscal stimulus, much like lock-step actions by nations in recent weeks to inject capital into banks and to lower interest rates.
China's move could set a bar for other countries to follow, said Carl B. Weinberg, chief economist at High Frequency Economics.
China's plan would include tax cuts, a loosening of credit and government spending through 2010 on a wide range of programs, including construction of low-income housing, transportation systems and the development of rural infrastructure, the official New China News Agency said.
Analysts welcomed the larger-than-expected stimulus package, which amounts to a hefty one-sixth of China's annual economic output. They said the spending would help businesses, boost demand for commodities and raise consumption.
China's announcement appeared to give an immediate lift to investors' confidence, as stock markets today rose in Asia and Australia. Chinese stocks jumped the most in seven weeks, gaining as much as 5.9% in morning trading.
"The Chinese stimulus package is a bold and very positive step for the Chinese and global economies," said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pa.
With the U.S., Japan and much of Europe staring at recession, China's role looms ever larger because it has been a major driver of global economic growth in recent years. China's rapid expansion has spurred trade and commodity purchases and prices. Many multinational companies are looking to China's large market to help them ride out the turbulence of the worst global downturn in decades.
