Numbers of the Week

2.6 billion tons

Major coal-mining enterprises monitored by the National Development and Reform Commission dug up 2.6 billion tons of raw coal in 2008, an increase of 12.8 percent from 2007.

178.88 million tons

China imported a total of 178.88 million tons of crude oil in 2008, an increase of 9.6 percent year on year.

TO THE POINT: As a supplement to this issue's cover story, Market Watch takes a quick look at the rest of the industries that the Central Government seeks to revitalize. They include the light, petrochemical, nonferrous metal and logistics industries. The budget deficit this year is expected to hit an all-time high of 950 billion yuan ($140 billion) in the wake of massive tax cuts and increased government spending. In the first month of this year, the amount of loans issued by banks reached a record high in accordance with the government's attempt to inject more liquidity into the markets.

By LIU YUNYUN

The Rest of the Revitalization Package

Light Industry

On February 19, the State Council passed the readjustment and revitalization plan for light industry, and decided to appropriate more funding to rural households that purchase home appliances.

The State Council said light industry was important in terms of enriching people's lives and providing employment. The major contents of the plan include the following:

--Actively expand rural and urban consumption by increasing effective supply; improve export service to maintain the current market share.

--Speed up technology upgrades and independent innovations in the paper-making, home appliance and plastics sectors. Outdated production capacity should be eliminated for the sake of environmental protection and energy conservation.

--Attach due attention to food security. Companies producing unhealthy food must be punished severely.

nBuild up large enterprises with independent brands. Mergers and acquisitions are also encouraged.

--Cultivate a number of light industry clusters in the central and western regions of China.

nImprove the quality of light industrial goods. The government will further increase export tax rebates for certain products, reduce tax burdens and offer more loans to small and medium-sized companies. Rural households will receive government subsidies to buy home appliances, including microwave and electromagnetic ovens.

--Provide more financial support for light industry in minority regions and places hit by the Wenchuan earthquake.

Petrochemical Industry

The State Council passed the revitalization plan for the petrochemical industry on February 19. It said the petrochemical industry is a capital and technology-intensive one that plays a significant role in propping up economic growth.

The government will focus on the following aspects to sustain sound growth in the industry:

--Guarantee the stable operation of the industry and increase the domestic consumption of petrochemical products; reform the pricing mechanism of energy products.

--Safeguard the supply of materials needed for agricultural production; reduce the cost of fertilizers and pesticides; and create a complete network for agricultural diesel supplies.

--Advance technology innovation in big petrochemical projects; speed up and refine the construction of ethylene projects; develop new technology to dispose waste materials and invest more in the recyclable economy.

--Totally eliminate outdated operational capacity. Excessive coal chemical projects such as coke and calcium carbide processing will no longer be approved.

--Give more policy support to refined oil reserves and technological innovations in the petrochemical industry. Further improvements will be made in tax policies, while petrochemical enterprises will be able to get more loans.

--Optimize petrochemical company management and enhance the risk-control capabilities of those companies.

Nonferrous Metals Industry

On February 25, the State Council passed a readjustment and revitalization plan for the nonferrous metals industry.

The State Council meeting chaired by Premier Wen Jiabao recognized the importance of the nonferrous metals industry, because its wide variety of products is widely used in many industries. The recovery plan includes the following:

--Stabilize and expand the domestic market, while simultaneously improving export conditions, and readjust product structures to meet the demands of the power, transportation, construction, mechanical and light sectors. More government support will be dedicated to the export of deep and fine processed metals with rich technology and high added value.

--Strictly control the overall output volume and eliminate backward production capacity. By 2012, a total of 1.5 million tons of mini-scale electrolytic aluminum, copper and zinc operating capacity will be eliminated.

--Intensify technological renovations in the industry and strengthen research and development.

--Accelerate mergers and acquisitions among nonferrous metal companies, optimize industrial layout, and improve company management and safety supervision to increase the industry's competitiveness.

--Make full use of both domestic and international resources to secure supplies.

--Develop a recyclable economy in the nonferrous metal sector. The government will arrange loans to help enterprises upgrade their technology. It also will set up a state reserve mechanism and readjust the export tax rebate.

Logistics Industry

Logistics was the last item on the government's industry revitalization agenda, but it was not the least.

The inclusion of the logistics industry came as a surprise to many observers who believed that the real estate industry would be included instead. But a report in the Securities Times quoted an unnamed government source who said the government feared that the country's fledgling logistics industry would be shattered by the devastating financial crisis.

The State Council concluded that logistics is a complex service industry combining transportation, inventory, freight forwarding and information technology. It extends to a wide range of sectors and offers a large number of employment opportunities. Because the country's current logistics services are outdated, they severely hinder the improvement of national economic strength. The government will build a modern logistics system in the following ways:

--Actively boost market demand and advance the professional service of logistics companies.

--Accelerate mergers and acquisitions in the industry to nurture a number of internationally competitive logistics enterprises offering superior services.

--Develop logistics services in major sectors such as energy, mining, automobiles, agricultural production and pharmaceuticals.

--Increase efforts in the industry's infrastructure construction to enhance standardization.

--Reform the industry's supervision system and encourage society to invest in logistics.

Biggest Budget Deficit Ever

The Ministry of Finance has never been this bold before.

It has worked out a budget deficit of 950 billion yuan ($140 billion) for 2009, the highest amount since the founding of the People's Republic of China in 1949.

The amount is about 3 percent of China's gross domestic product (GDP) in 2008. In the past decades, the budget deficit has never been higher than 1 percent of GDP.

Analysts said China is exercising due diligence to combat the global credit crunch using the Keynesian model-a substantial increase in government expenditures and large-scale tax reductions, without falling into the trap of protectionism.

According to the 21st Century Business Herald, an official from the Ministry of Finance who declined to be named said this year's deficit could be manageable thanks to the healthy balance in the past.

Previously, the government was rather conservative in determining the budget deficit and carefully kept it below 1 percent of GDP. In 2008, the deficit was a mere 111 billion yuan ($16 billion), less than 3 percent of that of the United States.

The deficit bill will be sent to the annual session of the National People's Congress in March for deliberation.

January Credit Soars

China's credit exploded to a record high in January, defying the worldwide credit crunch which has taken a toll on major economies.

According to the People's Bank of China, banks issued loans totaling 1.62 trillion yuan ($237 billion) last month, almost as much as one third of all newly added loans during the whole of 2008.

The astronomical figure did not come from out of the blue.

Last November, the government loosened control over credit expansion in a bid to secure 8-percent GDP growth. But risk-adverse banks were still reluctant to issue loans against the backdrop of the worsening global economic situation and domestic slowdown.

To make headway with credit, the Central Government proposed a 4-trillion-yuan ($586 billion) economic stimulus package, later followed by other revitalization plans for major industries, and vowed more support for small and medium-sized companies. Feeling more secure, banks rushed to loan money to government projects, which eventually led to booming credit.