Beijing China's $586 billion stimulus package is its "biggest contribution to the world," Premier Wen Jiabao said Monday, as hopes rose that heavy spending on construction and other projects would help support global growth by fueling demand for imported machinery and raw materials.
The massive Chinese spending plan - the largest ever undertaken by the communist leadership - was motivated by growing alarm at an unexpectedly sharp downturn in the country's fast-growing economy that raised the threat of job losses and social unrest.
Sunday's announcement staked out a bold position as President Hu Jintao prepares for next weekend's meeting in Washington of leaders of 20 major economies to discuss a response to the global financial crisis.
Wen, the country's top economic official, said the plan is meant to boost investment and consumer spending, maintain export growth and promote corporate competitiveness and financial reform.
"We must implement the measures to ensure a fast and stable economic development," Wen told a meeting of government leaders, according to a report on state television. "They are not only the needs of the development of ourselves, but also our biggest contribution to the world."
The plan calls for higher spending through 2010 on airports, highways and other infrastructure, more aid to the poor and farmers, and tax cuts for exporters. That could boost demand for iron ore from Australia and Brazil, factory and construction equipment from the United States and Europe, and industrial components from throughout Asia.
"Faster growth in China will be better for its neighbors. For every country in the region, it's either their top trading partner or is on the way to becoming the top," said Tim Condon, Asia regional economist for the Dutch bank ING.
On a global scale, "countries that supply capital equipment look like they will be the front-line beneficiaries of this package," he said.
Asian stock markets surged Monday on news of the plan, but world markets were mixed later in the day. Wall Street erased an early rally as enthusiasm for the Chinese package gave way to anxiety about how U.S. companies will survive a severe pullback in spending.
China's economic growth slowed to 9 percent in the last quarter, down from last year's stunning 11.9 percent and its lowest level in five years. Export orders have fallen sharply as global demand weakens, leading to layoffs and factory closures.
Analysts have slashed forecasts of next year's economic growth but said Monday that with the new stimulus it should be at least 8 percent.
China's announcement came as economic officials from the Group of 20 leading economies, which includes major wealthy and developing nations, called Sunday for increased government spending to boost the troubled global economy.
The United States has allocated $168 billion this year for tax rebates to individuals and tax breaks for businesses, in addition to the $700 billion to bail out troubled financial institutions.
Unlike China's plan, it includes no spending on capital projects, though President-elect Barack Obama has supported an additional $50 billion stimulus package for infrastructure projects such as roads and bridges, intended to create jobs. House Speaker Nancy Pelosi urged Congress last week to approve a stimulus bill before the end of the year.
Meeting in Brazil, G20 finance ministers and central bank governors said emerging economies deserve a prominent role in talks to overhaul the world financial system.