During a press conference organized by the State Council Information Office, vice-director of the National Development and Reform Commission (NDRC), Mu Hong said that the 4 trillion yuan would only be part of the country’s total investment and the central government would provide 1.18 trillion yuan for the package.

The total spending of investment from which including businesses and local government will reach 4 trillion yuan by the end of 2010. But Mu conjectured that investment from across society could be even higher.

Though local governments are not allowed using bond issues to raise capital, the central government is considering permitting them to change it into loan transfers or appropriate channels or measures with central approval so that capital can be raised, Mu said.

Vice minister of Finance Wang Jun said all types of capital, including private equity are welcomed to do help keep the economy stable.

This was the first time the government had revealed details about its spending plans.

Drastic measures were essential as the external economic environment “posed a severe challenge” for China to maintain growth, Mu said, the slowdown of China’s economy is being more and more distinct, especially after September. From the first quarter to the third quarter, the growth rate of China’s domestic product has reduced from 10.6 percent to 9 percent.

The strong evidence of a slowdown is that the growth rate of October’s industrial value-added output dropped to a seven year low of 8.2 percent. China’s productivity would be heavily damaged if the slowdown accelerated, according to Mu, so the Chinese government urgently decided to change policies in macro-economy and launched the 4 trillion yuan stimulus package.

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