China Injects $25-Billion into ASEAN

China will extend $25 billion in aid and credit to members of the Association of Southeast Asian Nations, ASEAN, in two programs:

• $10 billion China-ASEAN investment cooperation fund, to be used for infrastructure construction, energy production, information technology and communications.
• $15 billion in credit during the next 3-5 years, as well as $40 million in special aid to Cambodia, Laos and Myanmar to meet "urgent needs" in those countries.

ECONOMY RECOVERING ALREADY

China's 4 trillion yuan (US$588 billion) stimulus plan is paying off already, not only providing the country with time to wait out the global economic revival, but yielding renewed growth.

Industrial output growth is recovering and the decline in trade is easing. Output grew 11% in February. Industrial power use, cement output, coal and steel production all grew. Imports still fell 24%, but that is better than January's 43% drop, indicating a revival of domestic demand.

On March 5, Premier Wen Jiabao still maintained the annual GDP growth target for 2009 at 8%. And in its report "World Economic Situation and Prospects 2009", the UN estimates that China's GDP will grow 8.4% this year. China contributed 22% of global GDP growth in 2008, and will contribute a higher proportion this year since developed economies are in recession.

In 2009-10, China offers attractive market opportunities, with much greater demand for capital goods, and stable returns on investment. And its huge foreign exchange reserve means the country has no lack of liquidity.

BUSINESS: Coca-Cola to Invest Another $2 Billion

Coca-Cola today said it plans to invest $2 billion in China over the next 3 years, on top of $2.4 billion for acquiring Chinese beverage maker Huiyuan Juice Group.

The new investment is larger than the total $1.6 billion which Coca-Cola has already invested in China since 1979. It will be used for new plant and distribution infrastructure, sales and marketing, and R&D.

"Coca-Cola is proud to be a long-term partner of China, and our commitment and confidence in China never wavers," said Chief Executive, Muhtar Kent. He made the comment after Coca-Cola opened a $90 million innovation and technology center in Shanghai, the firm's largest in Asia.

STILL AIMING for 8% GDP GROWTH in 2009

Premier Wen Jiabao tonight delivered a report on the work of his cabinet at the opening meeting of the annual full session of the National People's Congress (NPC), China's top legislature.

Below are the main highlights of his 44-page "Report on the Work of the Government" — a set of plans and polices the government will use to cope with the tough economic situation and stimulate the economy.

MAJOR TARGETS for 2009

• GDP will grow by about 8%
• Economic structure will further improve
• Urban employment will increase by 9+ million persons
• Urban unemployment rate will be held under 4.6%
• Urban and rural incomes will grow steadily
• Rise in the CPI (inflation rate) will be held to 4%
• Balance of payments will continue to improve
  

GOVERNMENT DEFICIT

• Central government: set at 750 billion yuan (up 570 billion yuan from 2008);
• Local governments: will issue 200 billion yuan worth of bonds;
• Total deficit: 950 billion yuan (still less than 3% of GDP)
  

REAL ESTATE MARKET

• More vigorous policies to stabilize market confidence/expectations.
  

AGRICULTURE and RURAL FARMING

• Allocate 716.1 billion yuan, an increase of 120.6 billion yuan over 2008
  

INDUSTRIAL RESTRUCTURING
Conscientiously implement plans to adjust/invigorating key industries:

• automobiles
• steel
• shipbuilding
• petrochemicals
• textiles
• nonferrous metals
• equipment manufacturing
• information technology
• modern logistics
• light industry

SCIENCE and TECHNOLOGICAL INNOVATION

• Allocate 146.1 billion yuan to science/technology sector, up 25.6% over 2008
  

SOCIAL SAFETY NET

• Spend 293 billion yuan on the social safety net, up 17.6% over 2008.
  

EMPLOYMENT

• Allocate 42 billion yuan for more-proactive employment policy
  

HEALTH CARE REFORM

• Allocate 850 billion yuan over 3 years (332 billion from central government).

8% GDP Growth is on Track

China says its 8% growth target for 2009 is within reach. The IMF forecasts China’s economy will expand 6.7% in 2009. But Mr. Liu Tienan, vice-chair of National Development and Reform Commission (NDRC), restated the 8% goal and says China has “the conditions and the confidence” to meet it. Liu said China's financial system is healthy, its economic fundamentals are unchanged, and the economy has shown “positive signs.”

China's massive $700 Billion stimulus plan, which runs through 2010, may be doubled, pumping even more funds into housing, railways, highways, airports, and power grids.

The 10-industry support package covers autos, steel, shipbuilding, textiles, light industry, nonferrous metals, logistics, petrochemicals, electronics, and machinery manufacturing.