The conference which began in Beijing on Monday will come to an end today. The three-day event is expected to how more details on how the government will use fiscal and monetary measures to support employment and domestic demand, while reducing excessive dependence on exports.

According to Song Hong, a researcher with the Chinese Academy of Social Science (CASS), the meeting will announce the detailed measures for the goal of economic growth in 2009, the minimum required to control the unemployment situation.

Song was one of the two economists who attended a Nov 28 meeting with top Party officials to discuss economic priorities for 2009.

The nation’s economic growth dropped to 9% in the third quarter, and the situation may be worse because of the global crisis, the World Bank forecast earlier.

Such growth is absolutely not enough for China, because the nation needs to create 10 million jobs for fresh job seekers each year. Over the past months, the bankrupt of a number of factories in the costal export bases have caused layoffs of hundreds of thousands of migrant workers.

The government has to announce several stimulus packages and cut interest rates to spur domestic demand in the bleak situation.

It is said that the government may express how and where to use the stimulus package in detail at the conference.

The package could bolster annual GDP growth by 1% point by 2010, Zhang Ping, minister of the National Development and Reform Commission said earlier. Based on the data, 1% growth could create about 1million jobs.

Song forecasted that the policy makers may continue to the ongoing stimulus measures, because the $586 package is not enough in the worsening world economy.

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The benchmark Shanghai Composite Index edged up 1.84 percent, which was 36.09 points, to close at 2001.5 on Nov.4. And the turnover on the bourse reached the highest point since May 9, which ballooned to 125.7 billion yuan from Wedesday’s 90.7 billion yuan. The smallest Shenzhen Component Index finished at 7130.9, which jumped 1.28 percent, or 89.86 points.

A senior analyst at CITIC China Securities Dong Chen said, “I will still take it as rebound rather than a V-shape reverse, thanks to the government’s intensive launch of heart-stirring news.”

Late on last Wednesday, the State Council listed nine areas in a statement in which interest rates, liquidity policy and the exchange rate would be used to back up the economy. And this year, another 100 billion yuan will be provided to three policy banks.

At the same time, by purchasing shares at the Shanghai Stock Exchange, Central Huijin, an arm of the leading wealth fund, has raised its holdings of China Construction Bank (CCB), Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC). From the statistics of Sept 23 to Nov 28, we could see that Central Huijin has invested 763 million yuan to ICBC, 177 million yuan to BOC and 277 million yuan to CCB, which has helped to stabilize the market.

The rebound of the financial stocks yesterday is one of the best performers. Ping An Insurance rose 7.52 percent to 25.75 yuan, China Life Insurance advanced 5.4 percent to 19.92 yuan, while ICBC was up 2.33 percent and CCB 3.06 percent.

Reviews are positive toward the government policies and they are attracting money back into equities, according to Dong. However, he also noted that it is still not clear for the China’s economy which fundamentally determines the situation of the stock market. He said, that depends on the speed of recovery of the global economy, especially the US.

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Also, the three policy banks will get 100 billion yuan ($14.6 billion) from the government to prop up economic growth during the worsening global financial crisis.

When chairing an executive meeting of the State Council, or the Cabinet, Premier Wen Jiabao also said they will take steps to help economy over the crisis.

The meeting said that banks, securities firms and insurers should take coordinated action to do more in supporting economic growth and contributing to industrial restructuring.

It is urgent to implement a “pro-active fiscal policy” and “a moderately easy monetary policy” in the global financial crisis; and the financial sector should play a far more important role in economic development, said the meeting.

Four measures below are among the nine which were announced to boost the role of the financial sector in the economy.

• Urge commercial banks to meet the demand for loans from severely hurted SMEs, investors in the countryside as well as home and car buyers.

• Expand the issue of treasury bonds.

• Allow insurance companies to invest in major infrastructure projects.

• Use exchange and interest rates and the bank reserve requirement ratio to ensure liquidity in the banking system.

Analysts believe the move is part of the government’s answer to how the stimulus package, which was announced on Nov 9, will be financed.

The central government said last month it would provide 1.18 trillion yuan, or 30 percent, while the rest will be made up by local governments and enterprises.

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Because of the moves of stimulating investment and consumption, it is believed that the GDP growth could get 9% next year—with 70% possibility.

Wang Tongsan, a senior economist also holds the same opinion, he said the growth might be higher.

According to the economic forecast research team, the growth rate in economy next year will be 9.3%, which is higher than those made by international organizations.

The World Bank said last month that although they expect China can have 9.4% growth this year, China’s growth may slow to 7.5% next year, the lowest since 1990, as the global financial crisis would affect more on economy in 2009.

The whole world is paying attention to China’s next year’s growth. An Organization of Economic Cooperation and Development report said China’s growth next year could be 8%, while the International Monetary Fund put it at 8.5%.

Chinese Academy of Social Sciences (CASS)’s Wang said the stimulus package and moves from government will make next year different. They believe the policies to spur domestic demand will work well and bring impressive effect.

Local government have promised to follow the central government’s steps to give a hand helping stop the national economy from sliding further after it registered an annualized 9% growth in the third quarter of this year.

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The measures were announced by the central bank last week who had cut the reserve money requirements for banks and removed curbs on lending. These moves will squeeze interest spread of banks as well as boosting the total lending amount at the same time, they said.

Bankers and economists said that the lower lending rates have lowered both the financing burden for most of the banks and the chances of loan defaults.

People’s Bank of China cut its benchmark interest rate by 1.08 percentage points last Wednesday amid a number of less massive cuts in short-term deposit and lending rate.

As Chinese lenders’ major income source, the interest margin was narrowed although interest rates for the one-year deposit and lending rate fell by the same amount, said She Minhua, a China Securities analyst, it was expected to have bigger points than the 0.36 percentage points fall in demand deposit interest rate.

The interest spread is expected to narrow by 32 basis points, according to Wu Yonggang, an analyst at Guotai Jun’an Securities.

Based on the report of the Bank Of Communications International Trust Co, compared with the strong growth in recent years, lenders’ profit growth might fall below 10 percent in 2009.

But the moves are also light for many others. They said the negative impact of shrinking interest margins would be offset by the anticipated surge in lending.

In the short term banks’ net income will be reduced along with the narrowing interest spread, said Southwest Securities analyst Zhao Jun, but after a long time the rate cuts would increase lending and raise income.

According to Zhu Baoliang, an economist with State Information Centre, the Chinese commercial banks around 400 billion yuan for new lending which is higher than 360 billion yuan in 2008 will be available because of the latest rate and reserve ratio cut.

Since there maybe still a tough year ahead, Chinese bankers would rather remain cautious on new lending.

Bank of China’s vice-president, Zhu Min said that banks would not follow the projects of stimulus plan, and we need rigorous examination to guarantee the quality and results of the nation’s macro adjustment policies.

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He said at a press conference in Beijing that they must take forceful and effective measures to stop undue slowdown of the economy.

Zhang’s words came a day after the central bank cutting the interest rate by 1.08 percentage points, which is the highest in 11 years. The act of cutting interest and the stimulus package are expected to boost domestic investment.

The additional importance of raising domestic demand is gained because of many foreign buyers having slashed their orders with Chinese companies.

The government has showed the details of how they will spend the more than 40 percent of the initial 100-billion-yuan investment package, according to Zhang. It has promised to stop the growth rate from sliding further from the 9 percent in the third quarter of this year with the investment package.

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The benchmark Shanghai Composite Index and Shenzhen Component Index both soared several percent especially Shanghai Composite Index had 884 stocks closing higher.

The amount of the combined turnover on the two bourses was 120.35 billion yuan, which decreased 16.7% from Tuesday.

According to analysts, they have expected the turnaround would appear because of the short-term pressure by the huge stimulus package. The mainland’s major index shed 6.31 percent on Tuesday due to growing concern about the global economy.

Mao Nan, an analyst at Orient Securities Co Ltd. said that owe to the government’s recent bold fiscal move, the market confidence has fundamentally grown and there are still much space for index to get further advancement.

The accounts of China’s newly opened stock investment soared 55% to 261,846 in the week ended Nov 14 from the previous week.

The stock market can reflect the country’s economy, which will definitely be stimulate by government’s policy to boost domestic demand, Mao estimated that the interest rate cut would be carried out in near future.

Based on vice-president of Asia-Pacific equity research for Standard & Poor’s, Lorraine Tan’s opinion, although mainland stocks cannot be separated completely from overseas markets, the selling pressure here is much greater than in other markets due to the sharp fall in the past 10 months. “The Shanghai index was down 67 percent by October, and probably has to consolidate.”

Shares in Chinese oil refiners restarted amid speculation that China would reform the fuel price, which would better refiner’s margins. Sinopec surged to its daily limit to 8.37 yuan several days ago, while rival PetroChina jumped 7.49% to finish at 11.91 yuan.

All shares in the financial sector gained in Nov 20th’s session. But Tan noted that the bad news still existed in the process of economic front, and the stock market would stay fluctuant. “We expect more details of China’s stimulus package to come out, and a better performance will probably be seen in the second half of next year.”

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The urban construction and communications bureau announced last week plans to spend 500 billion yuan on a large scale of infrastructure projects, such as the improvement of affordable and low-rent housing, building projects in the suburbs, constructing an international shipping centre and investment in urban transportation facilities.

In addition, a series of measures were announced to expand financing for small and innovative companies. Sun Lijian, a professor of Fudan University said, “The measures, along with the billions of yuan being committed, are in response to the central government’s latest moves to stimulate domestic demand.”

According to Chen Xiao, a professor from Shanghai Jiao Tong University, the 500-billion-yuan investment will speed up the reconstruction projects. He said, other delayed investment projects caused by the shortage of funding may also be activated through the investment package.

He still said the real effects of the stimulus plan would be determined by the criteria for the selection of projects. Under such circumstance, the investment will be put into areas where are in need of money.

Compared with the first half of the previous years, the growth rate of the city fell to 10.3 percent, down 2.7 percentage points. The next two months and the first half of 2009 will be “tough”, the mayor said, to sustain the smooth development and keep the livelihood of the citizens will be the city’s priority and they will take every effective measure to achieve the goal.

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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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United States: The global crisis was brought about by the housing market collapse of this country which has earmarked $700 billion for bank funding. It is expected that Barack Obama would spend hundreds of billions of dollars more in a fiscal stimulus package once he assumes office next year.

United Kingdom: The country has carried out a 500-billion-pound rescue plan to help the banking sector. The government will make extra capital available to eight of the country’s largest banks and building societies in exchange to let them enjoy priority in shares or equity.

Germany: Has decided to allocate 500 billion euros to be liquidity or lending guarantees and 80 billion euros as state funds for bank recapitalization. The government has announced an unlimited guarantee on all retail deposits in the country’s banks.

France: Has carried out a plan to keep its financial sector stable. The liquidity and lending guarantees in this plan are up to 320 billion euros and bank recapitalization up to 40 billion euros.

Japan: Has commenced urgent steps which include to inject public funds into regional banks and to stabilize its financial market. The government is mulling measures to temporarily suspend sales of stocks held by government entities and reduce the restrictions on corporation’s purchasing of their own shares, as well as an expansion of disclosure rules on short-selling.

South Korea: Has taken a $130-billion rescue package, including sate guarantee on foreign debts and promises to recapitalize financial firms.

Australia: An urgent A$10.4-billion stimulus package has been announced to deliver cash payments to pensioners and low- and middle-income people and to offer A$1.5 billion to help people when they buy their first homes.

India: The country’s plan is taking the steps as follows: to restore the duty drawback to 11 percent; requisition to fix interest rate at 6 percent for packing credit; the repayment‘s interest of term loan can be delayed by two years; compensation to state levies and transaction cost and duty free procurement of diesel.

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