SHANGHAI, August 25 – China is considering an economic stimulus plan worth 54 billion dollars, including tax cuts and government spending to prop up growth, state media reported Monday.
The 370-billion-yuan proposal, which has yet to be finalised, includes 220 billion yuan in fiscal spending and 150 billion yuan in tax cuts, the Economic Observer reported, citing unnamed sources.
The Central Financial Leading Group, which is composed of senior officials from various government agencies, supports the plan but it still needs to be submitted to the State Council, or cabinet, the weekly newspaper said.
The proposal is meant to "give the economy some breathing room" following a slowdown after monetary tightening, the report said, adding that the Ministry of Finance is to work out the plan\’s details.
The report comes after JPMorgan Chase economist Frank Gong said in a note last week that Beijing was mulling an economic stimulus package of up to 400 billion yuan to boost growth.
Chinese economic growth slowed to 10.4 percent in the first half of 2008 from 11.9 percent for all of last year. There are concerns that weakening export growth due to the global slowdown could further hit the Chinese economy.
However, any new measures will be mainly fine-tuning and drastic policy changes are not necessary, Fan Jianping, a researcher with the State Information Centre, a government think tank, said in remarks published Monday.
There have been positive changes in trade, retail sales and investment figures "so there is no need to be drastic in macroeconomic control in the second half of the year," Fan told the official China Securities Journal.