Numbers of the Week

10.34%

China's installed power capacity increased 10.34 percent to 792.5 million kw at the end of last year, according to the State Electricity Regulatory Commission's latest report.

$92.4 billion

Foreign direct investment in China jumped 23.58 percent year on year to $92.39 billion last year, according to the Ministry of Commerce.

TO THE POINT: A long-awaited stimulus package for the auto and steel sectors was finally unveiled to boost China's two pillar industries. Fuel prices were cut for the second time in a month, a signal that the country's retail fuel prices may be reduced more frequently to keep in line with global gas prices. A downtrend is still casting gloom over China's economy, as indicated by last December's figures, with exports plummeting 2.8 percent, and nationwide property prices seeing their first year-on-year drop. The growth of the country's foreign exchange reserves also fell last year for the first time since 1998.

By HU YUE

Reviving Auto and Steel Industries

The government unveiled a wide-ranging support package for the auto and steel industries in hopes of rejuvenating the two pillar sectors of the Chinese economy amid a global slowdown.

The State Council approved the package at a meeting on January 14.

To speed up the consolidation and revival of the auto industry, China must implement an active policy to boost consumption, according to the State Council meeting. The government will cut the purchase tax on cars with small engine displacements (less than 1.6 liters) from 10 percent to 5 percent, effective from January 20 to the end of 2009. The government also will set aside 5 billion yuan ($730 million) to subsidize farmers who discard their overused high-emission vehicles and buy autos with engine displacements of 1.3 liters.

Meanwhile, the government pledged its full support for mergers and acquisitions among the country's major auto manufacturers. It will set up a fund of 10 billion yuan ($1.5 billion) in the next three years to help car manufacturers introduce technological changes. The government also encouraged the purchase of fuel-efficient and new energy autos.

The State Council also pointed out the necessity of readjusting and reviving the steel industry. It said steel manufacturers must keep their output at a reasonable level, eliminate inefficient production, consolidate the sector through mergers and acquisitions, upgrade their technology and modify the industry's current layout. The government noted the importance of rectifying iron ore import orders and suggested setting up a risk-sharing system.

Cheaper Fuel Prices

China's refined oil prices moved a step closer to international price levels after an overhaul of the country's oil pricing and taxing mechanism.

The National Development and Reform Commission (NDRC), the country's top economic planner, cut gasoline and diesel prices by 140 yuan ($20.5) and 160 yuan ($23.4) per ton, or by 2 percent and 3.2 percent, respectively, on January 15.

It was the second fuel price cut within a month. On December 19, 2008, the NDRC slashed retail fuel prices by as much as 18 percent, which also was the first cut in almost two years.

"Actually this time should be the third drop," Zhou Dadi, an energy expert from the NDRC, told the media. "As of January 1, retail fuel prices included consumption taxes of 0.8 yuan ($ 0.12) and 0.7 yuan ($ 0.10) per liter for gasoline and diesel, respectively, which also meant a decline in retail prices."