Stimulus package details revealed

Beijing gave further details on Friday as to how China’s US$586 billion stimulus package will be spent over the next two years, the Wall Street Journal reported. The central government itself will directly fund about 25% of the total, with other funds expected to come from local governments and the private sector. The first portion of the package, totaling US$14.65 billion, will be spent by local governments in the fourth quarter of 2008. A third of the money will go to rural areas, a quarter to build transportation infrastructure, and most of the rest to public housing, enivironmental projects, and health and social services, according to Mu Hong, vice chairman of the National Development and Reform Commission. Beijing will likely have to significantly boost its own debt sales to fund the stimulus. Officials gave no indication that China would tap its nearly US$2 trillion in foreign-exchange reserves.