More stimuli on tap, planners suggest
Cary Huang in Beijing
The mainland's central bank chief and top economic planner have indicated the central government is prepared to further stimulate the economy if needed, even though they said they saw signs of recovery.
They also pledged to 'act decisively' to restore confidence if further help for the world's third-largest economy was needed.
On Thursday, Premier Wen Jiabao stopped short of announcing an expansion of the government's 4 trillion yuan (HK$4.5 trillion) stimulus package in his work report to the annual session of the National People's Congress.
Global stock and oil markets rose on Wednesday, largely on expectations that China would announce such plans this week. The Shanghai stock exchange jumped 6.1 per cent on Wednesday, but seesawed for much of Thursday after Mr Wen had spoken.
Comments from top officials in charge of economic affairs yesterday suggested the government had been working on plans to give a further jolt to the economy if needed.
People's Bank of China governor Zhou Xiaochuan told a press briefing that the central government had contingency plans to deal with the global financial crisis.
The plans were about how 'we will react according to how far the financial crisis deepens or any new changes in the situation', Mr Zhou said, without adding details.
At the same briefing, National Development and Reform Commission chairman Zhang Ping said the government would closely monitor the economic situation before deciding on any further stimulus measures.
Mr Zhang said that the government could 'respond flexibly to any new development in the financial crisis'.
'Whether we need to adopt new measures will depend on the changing circumstances,' he said.
'This is a dynamic policy, and one the outcome of which we must closely monitor.'
Some economists said the government needed time to observe the effect of the current stimulus package before it considered further action.
Frank Gong, chief China economist with JPMorgan Securities, said: 'As policymakers wait and watch whether the latest signs of recovery could turn into a more sustainable trend, they might consider the need for further short-term stimuli less imminent.'
With concerns raised about whether the investment boost might result in 'duplicated and wasteful' construction and corruption, Mr Zhang said the central government had sent 24 teams to check spending.
Mr Zhou said China had learned a lesson from other countries that a sluggish response to the crisis only delayed the restoration of confidence.
'In particular, we have to avoid being too slow-handed or light-handed in responding,' Mr Zhou said. 'We must err on the side of being quick and decisive.'
Both men said the stimulus package had already achieved significant results.
'We are also seeing that the economic figures are stabilising and recovering, which demonstrates that the policies have begun to show an impact,' Mr Zhou said.
Miao Wei, vice-minister of industry and information technology, said the mainland's industrial-output growth may have rebounded in the first two months of this year, adding to signs of economic recovery.
Combined industrial output for January and February may have increased 6 per cent to 7 per cent from a year earlier, he said, compared with 5.7 per cent growth in December and 5.4 per cent in November. The official figures are due out next week.