The pressure on the economy is increasing and this month's indicators show a faster declining tendency, the country's top planning official said on Thursday.
But the government will take effective steps to increase domestic demand and create more jobs, said Zhang Ping, minister of the National Development and Reform Commission (NDRC).
Zhang Ping, minister of the National Development and Reform Commission, speaks at a press conference on China's economy in Beijing November 26, 2008. [CFP]
"We must take forceful and effective measures to curb excessive slowdown of the economy," he said at a press conference in Beijing.
Zhang's remarks came a day after the central bank cut the interest rate by 1.08 percentage points, the highest in 11 years. That, along with the $586-billion stimulus package announced on Nov 9, is expected to boost domestic investment.
The move to raise domestic demand gains additional importance because many foreign buyers have slashed their orders with Chinese companies.
The government has already given details of how more than 40 percent of the initial 100-billion-yuan ($14.64 billion) investment package will be spent, Zhang said. It has promised to deliver the investment package within the fourth quarter to prevent the growth rate from sliding further from the 9 percent in the third quarter of this year.
Giving a breakdown of the fiscal stimulus plan, Zhang said major infrastructure projects such as railways, airports and highways will be allotted 1.8 trillion yuan, or 45 percent, of the stimulus package.
The rest will go to rural construction, healthcare, education, technological innovation, environmental protection, tax cuts for businesses and individuals, and reconstruction projects in disaster-hit areas.
The package, which runs up to 2010, is likely to generate an additional GDP growth of 1 percentage point a year during the next two years, Zhang said.
The government could cut the interest rate further in the coming months, analysts said, because the falling inflation rate offers greater room for easing the monetary policy.
Lower deposit rates are likely to discourage people from saving and prompt them to spend more, Wang Tao, UBS Securities economist, said.
The government has increased pensions for retirees and the allowance for low-income families. It has also raised the minimum purchase prices for grains to increase the income of people in rural areas, an important move to help laid-off migrant workers returning home to earn a living.
But migrant workers are not the only ones facing a more challenging future. The economic downturn has created an "explicit" impact on the job market, Zhang said, and the country will face the pressure of greater unemployment next year.
The country's economy has risen at a massive pace over the past two decades, creating more than 10 million jobs each year and keeping the registered unemployment rate in cities below 5 percent.
But it would be difficult to keep the unemployment rate at that level next year because some businesses have already gone bust and many others have suspended operations.
"The major task now is to maintain a stable and robust growth, which will help create more jobs," Zhang said.