SHANGHAI, China -
China announced yesterday a huge economic stimulus plan aimed at bolstering its weakening economy, a sweeping move that could also help fight the effects of the global slowdown.
At a time when major infrastructure projects are being put off around the world, China said it would spend an estimated $586 billion - about 7 percent of its gross domestic product - over the next two years to construct railways, subways and airports, and to rebuild communities devastated by a May earthquake in the southwest.
The package, announced by the State Council, or Cabinet, yesterday evening, is the largest economic stimulus ever undertaken by the Chinese government.
"Over the past two months, the global financial crisis has been intensifying daily," the State Council said in its statement. "In expanding investment, we must be fast and heavy-handed."
The plan was unveiled as finance ministers from the Group of 20 nations met in Sao Paulo, Brazil, over the weekend. It also came less than a week before Chinese President Hu Jintao was scheduled to go to Washington for a global economic summit called by President Bush. World leaders are expected to press China to do its part to help strengthen the global economy in the face of what some economists say is the worst financial crisis since the Great Depression.
On Saturday, Hu spoke by telephone with President-elect Barack Obama about a variety of issues, including the global financial crisis and how the two countries might cooperate to help resolve economic problems, according to China's state-run news media.
Although Beijing has indicated that it would focus on keeping its own economy on track, it is difficult to insulate any economy from a global downturn. After five years of growth in excess of 10 percent, China's economy is beginning to weaken because of slowing export and investment growth, waning consumer confidence, and severely depressed stock and property markets.
The stimulus plan, though motivated by domestic concerns, represents a fresh commitment by China to keep from adding to the economic and financial woes afflicting the United States and Europe. It is also likely to cheer foreign investors in China's economy by ensuring that the country remains a source of growth.
The State Council said the new spending would begin immediately, with $18 billion scheduled for the last quarter of this year.