Economists: Continue stimulus program

In response to the global economic meltdown, the central government launched a campaign to keep the economy from sliding into recession. The steps taken by the government have paid off.

In January 2009, twenty million migrant workers left for the cities for home to celebrate Chinese Lunar New Year. They had no jobs to return to once the holiday was over. The export oriented factories and workshops they had worked for in southern China had either shut down or gone bankrupt as the world economy soured. By January of this year, China's economic growth had been slowing since the beginning of 2008.

Knowing it could not afford to let economic growth lose momentum, the central government reacted quickly. It began by setting a growth target of no less than eight percent for 2009.

To achieve this, a stimulus package of four trillion yuan, or about 570 billion US dollars, was announced. The funding would finance programs in 10 major areas. They included low-income housing, rural infrastructure, water, electricity, transportation, the environment and technological innovation. The stimulus equaled one third of the country's fixed asset investment in 2007.

The policies also included a comprehensive reform of the country's value-added taxes, cutting industry costs by 120 billion yuan.

The central bank adopted a proactive fiscal policy. Commercial banks credit ceilings were abolished to channel more lending to priority projects, rural areas, smaller enterprises, technical innovation and industrial optimization through mergers and acquisitions.

The measures paid off. China's Gross Domestic Product grew 7.7 percent in the first three quarters of 2009. The latest economic statistics show GDP growth for the year is expected to exceed eight percent, meeting the national goal set for 2009.

However, experts warn China's economy still faces major problems such as slumping overseas demand and weak driving force on domestic market in 2010. They say more measures should be taken to raise people's incomes, increase investment in livelihood projects and give full play to impact consumption can have on boosting the economy.