3rd-batch stimulus to fall below previous ones

(Xinhua)
Updated: 2009-04-26 13:19

BEIJING -- China's central government will arrange 70 billion yuan (US$10.3 billion) for its third batch of stimulus investment, according to a Beijing-based newspaper citing an unidentified economic planning official.

The new investment would fall short of the amount for previous ones and market expectations of a larger amount of investments than the first two, said the Economic Observer.

The central government has so far cashed in a combined 230 billion yuan (US$33.8 billion) for its 4-trillion-yuan stimulus package announced last November to bolster the slowing economy, 100 billion yuan in the fourth quarter last year and 130 billion yuan in the first quarter this year.

"The third batch of investment is being arranged, and the total amount is around 70 billion yuan," an unidentified official of the National Development and Reform Commission (NDRC) told the Economic Observer.

"There could be slight adjustments to the finalized plan," said the official.

The final plan would be announced within a week, the newspaper reported Friday.

New investments would mainly go to projects that benefit people's livelihood and infrastructure projects, said the official.

The central government would cut back on investment in competitive sectors that have good expectations of returns, while increase that in sectors that have difficulty in getting enough funds, the official said.

However, the official did not explain whether the smaller central government stimulus investment was connected with soaring banks loans in the first quarter.

Wang Zhihao, an analyst with the Standard Chartered Bank, said less stimulus investment from the central government and pledges to stick to moderately easy monetary policy may indicate that the government would aim to bring more private-sector investment into play.

The change could mean that more funding of projects would come from bank loans in the future, said Wang.

The NDRC official was quoted as saying that the central government would continue to mobilize more investment from the private sector with government investment.

The NDRC was not available for comment Sunday, but a NDRC official told Xinhua last week the exact amount for the third-batch stimulus investment was not decided.

The China Securities Journal reported Tuesday that the third batch of central government investment would exceed 130 billion yuan, citing unidentified sources.

Reports on third-batch investment came after Premier Wen Jiabao said on April 16 that the country would "soon" cash in the third batch of pledged central government investment as a means to further expand investment. He said the economy was doing "better than expected" thanks to government stimulus moves.