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StanChart: China's stimulus spending could top 5 trillion yuan

By Nie Peng (chinadaily.com.cn)
Updated: 2009-03-09 16:39

China is likely to expand its 4-trillion-yuan ($586 billion) economic stimulus plan and boost the spending to 5 trillion to 6 trillion yuan, projected Standard Chartered Bank over the weekend.

Related readings:  Top legislature to improve supervision over stimulus plan  China unveils stimulus plans for nonferrous metals, logistics  Standard Chartered: China's stimulus plan to take effect in Q2   No need for new stimulus plan in China: advisor

The Chinese government is capable of expanding the stimulus package, said Stephen Green, research chief of Standard Chartered in Shanghai.

If government spending in the public sector succeeds in reviving demand in upper-stream industries, "the economic recovery would start at an earlier date and last longer", the report said.

The central government's promised share in the 4 trillion yuan package, accounting for some 25 percent, will materialize in the form of direct investment and loan discounts, said the report.

Highly commercialized projects are likely to get only loan discounts and no cash injection, according to the report. Therefore, most "central government-backed" projects would need bank loans and supporting funds from local governments.