China unveils massive economic stimulus package

China has unveiled a US$586 billion stimulus package intended to revitalize the country’s slowing economy, the Financial Times reported. The government said its spending plan – which will see significant investment in infrastructure and social welfare projects over the next two years – reflected a decision to adopt an "active" fiscal policy, while monetary policy would be "moderately active." With some economists saying that growth could fall to as low as 6% in 2009, Beijing was under pressure to take action. Interest rates have already been cut three times, bank lending quotas scrapped and specific measures introduced to help home buyers and exporters. The stimulus package will focus on low-income housing, water, electricity, disaster relief and transport, although it is unclear how much money will go to new projects not already in the budget. The government will also introduce value-added tax reforms that could cut companies’ costs by US$17.5 billion.