In one of the biggest move to resist against the financial crisis, China has announced a $586bn stimulus package.
Chinese and Japanese stocks soared Monday in early trading after the government’s announcement. The Cabinet approved the plan to invest money in infrastructure and social welfare by the end of 2010, a statement on the government’s Web site said.
Some of the money will come from the private sector. The statement did not say how much of the spending is on new projects and how much is for ventures already in the pipeline that will be speeded up.
What is concerning for China is its export driven economy starting to feel the pinch of weakening U.S. and European economies. The government has already cut key interest rates three times in less than two months in a bid to spur economic expansion.
Economic growth slowed to 9 percent in the third quarter, the lowest level in five years and a sharp decline from last year’s 11.9 percent.
The International Monetary Fund has urged governments to adopt economic stimulus packages and, in some cases, to cut interest rates further, to counteract the slowdown.