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Special> Global Financial Crisis> Latest
UPDATED: March 23, 2009
IMF: China's Stimulus Plan a Huge Contribution to the World
Against backdrop of the world's financial crisis, China will play a vital role in world's economic recovery

Against backdrop of the world's financial crisis, China will play a vital role in world's economic recovery, said Murilo Portugal, Deputy Managing Director of the International Monetary Fund (IMF) on Saturday in Beijing.

"I think China's role is very important. Its fast growth has already made important contribution to the world economy, and it will continue playing that vital role in world's economic recovery," Portugal said on the first day of the three-day China Economic Forum 2009.

China's financial policy has long been very self-regulated and prudent. Besides, China has large quantity of foreign exchange reserves and debts equaling to 20 percent of its GDP. Based on that, China can make great contribution to the world economic recovery, Portugal added.

He went on to say that the economic stimulus plan that China unveiled last November, stipulating that the investment from 2008 to 2010 will equal 13 percent of its GDP, is undeniably a huge contribution to the world growth.

Portugal said that he is confident that China will achieve high positive growth this year though the growth rate will lower than last year.

China has announced a 4 trillion-yuan ($585 billion) two-year economic stimulus package to boost growth and domestic demand, 1.18 trillion yuan of which will be funded by the central government.

The stimulus package plan has four major components, including large-scale government spending, industrial restructuring and rejuvenation, scientific research and social safety net.

Economic recovery depends on effective measures

The IMF predicted that world economic recession will further deepen in 2009 with world's per capita GDP probably dropping 2 percent or even lower, and world's total GDP also slumping and other related indexes further going down, Portugal said in his speech at the forum.

He said that the economic recovery, to a large extent, depends on whether the governments of different countries can take effective measures to reform their financial institutions and systems.

He added that if the financial and monetary conditions were improved, then the world would jump out of the current crisis at an earlier date. If the signs of recovery could appear in the second half of this year or in this summer, then the world could gradually walk out of this financial crisis.

In another report, the IMF said on Thursday that the world economy is expected to contract in 2009 for the first time in 60 years as advanced economies will shrink sharply.

Global activity will contract by 0.5 to 1 percent on an annual average basis, the first such fall in 60 years, the IMF said in an analysis provided to the Group of 20 (G20) industrialized and emerging market economies.

Advanced economies will suffer deep recessions in 2009, while the United States will contract 2.6 percent, the assessment said.

Capital injection into IMF at G20

Responding to the question of capital injection into the IMF at the upcoming G20 summit in London, Portugal said the IMF had enough resources to manage the problems the world economy is facing now.

"From the start of economic crisis, our credit capability is $250 billion, among which we have used $50 billion, so we still have $200 billion left," said Portugal, adding that "we hope to prepare for the worst to come, if more countries need our financial support. So far, we have got some commitments on capital injection from some countries."

He said that Japan is the first country to make such commitment. The IMF has signed the agreement with Japan, which has pledged to add $100 billion to IMF's funds. We can lend the money out, said Portugal.

Ahead of the G20 summit, the United States is calling for trebling of the IMF's resources to help countries facing financial and economic problems.

In preparation for the summit, finance ministers and central bankers from the G20 agreed last weekend to boost the IMF's funding capacity, but gave no figures.

(Xinhua News Agency March 22, 2009)


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