With their financial wounds healing rapidly, many private investors now have more capital available to devote to new projects. In addition, the broader economic revival is spilling into the private sector, a much-anticipated boon to provide confidence to the souring business atmosphere.

To further motivate private investors, easier access to financing could be a powerful catalyst, Zhang Yansheng, a senior economist, told Beijing Review.

In August, the NDRC reportedly presented a series of suggestions to the State Council, including allowing private companies into the infrastructure, education and public service sectors, as well as stepping up heavier financial and tax support.

If adopted, those measures will bring private investments a higher level of earnings visibility, and help stabilize the economy, said Ha Jiming, chief economist of the China International Capital Corp. Ltd., in an interview with the Economic Observer.

Steel Merger

The state-owned Shandong Iron and Steel Group recently announced to merge with the private mill, Rizhao Steel Holding Group Co. Ltd., in a government move to consolidate the steel sector and foster giant players that can compete globally.

Under the deal, Shandong Steel will pay cash for a 67-percent stake in the merged entity, leaving the remainder to Rizhao Steel. The combination would boost Shandong Steel's annual output to be the third largest in China.

Shandong Steel was established via a merger between the Laiwu Steel Corp. and Jinan Iron and Steel Co. Ltd. last March.

A deeper look at the industry shows a growing motivation of vigorous government efforts. The steel makers are reeling from market saturation as severe overcapacity sent steel prices plunging. Meanwhile, skyrocketing international iron ore prices placed an onus on the country, the world's largest importer, to streamline the sector and gain more bargaining power in the price talks.

Every measure possible to prevent the situation from deepening is being taken, as a clampdown on excess capacities has been stepped up. New steel-making projects launched so far this year still increased 20 percent year on year, said a report by the Ministry of Industry and Information Technology.

Bonds Debut in Hong Kong

The Chinese Central Government will soon begin issuing government bonds denominated in renminbi in Hong Kong.

The Ministry of Finance said it would offer 6 billion yuan ($878 million) in bonds on September 28 to retail and institutional investors. A number of state-owned Chinese banks, including the Bank of China, had issued renminbi bonds in Hong Kong since 2007 with government permission.

The sale will help "improve the international status of the yuan, promote development of the yuan bond market in Hong Kong, and help provide a pricing benchmark for mainland institutions' bond sales in Hong Kong," according to the statement from the Ministry of Finance.

This will propel a stronger role of the yuan in the global financial arena to match its rising economic power, said Guo Tianyong, a banking professor with the Central University of Finance and Economics, in an interview with Xinhua News Agency.

To heighten the status of renminbi in global trade, the central bank has inked billions of dollars worth of currency swap contracts with many foreign countries, including South Korea and Argentina. In another move, the government has jumpstarted a pilot program that allows companies in five domestic cities to settle cross-border trade deals in renminbi.

Time to Pull Back?

It will only be a matter of time before China must phase out the heavy stimulus after the economy has stabilized. The tricky part will be determining when the time is right to pull back. A quick withdrawal will stifle the resurging growth momentum, while inflationary fears may return if financial support is withdrawn too late.

Some economists caution that a rush into bank lending will leave the economy vulnerable to inflation and unstable growth. The worries are not unwarranted as the asset price inflation, evidenced by bubbles in real estate, has been rampant.

But Robert B. Zoellick, President of the World Bank, believes it is still too early for China to hold back the stimulus given uncertainties still hanging over the economy. The Chinese policy-makers should adhere to stimulative monetary and fiscal policies, he said during a recent visit to China.

In June, the World Bank raised its forecast for China's growth in 2009 to 7.2 percent from a previous 6.5 percent.

Zoellick added that China's turnaround had led to a welcome pick-up in imports that benefited its trade partners. "The challenge for China now is to deepen the domestic consumption trend through even stronger government investment in health and education, financial sector reform, liberalizing services further, and strengthening the integration of migrants in China's cities," he said.