BEIJING, Dec. 25 -- The legislature heard here on Wednesday a somber report on how the intensifying impact of the world financial and economic crisis is reverberating through China's economy.
Zhang Ping, minister in charge of the National Development and Reform Commission, representing the State Council (cabinet), outlined the situation to the Standing Committee of the National People's Congress.
He described how, since the third quarter, the impact had spread from coastal areas to inland regions, from export-oriented industries to other sectors, and from small companies to big ones.
Zhang said the deepening crisis and the fast-evolving world economic situation had greatly affected China's economy, with overall growth slowing and imports falling -- a situation unseen for many years.
Zhang also noted that investment demand had weakened and there were "difficulties" in industrial production, along with falling revenues and profits for business.
Zhang said that both exports and investment growth were rapidly slowing and industrial production was obviously declining, as shown by electricity use. Property and vehicle markets were sluggish, unemployment was up and international market turmoil had "shattered" domestic investment sentiment.
In response to the difficulties emerging since the third quarter, Zhang said, the central government decided to invest 100 billion yuan (about 14.62 billion U.S. dollars) during the fourth quarter on new projects and allocated a special earthquake relief fund of 20 billion yuan.
About 38 billion yuan will go to low-cost housing, rural infrastructure and education facilities. Some 19 billion yuan will be invested in large dams, crop storage and farm animal quarantine networks. About 18 billion will be channeled into energy efficiency and pollution reduction programs. The rest of the fourth-quarter economic stimulus fund, roughly 25 billion yuan, will be used in building highways and urban power grids, Zhang said.
The central-government stimulus plan is expected to draw matching funds from local governments, with the total investment reaching about 400 billion yuan, he said.
Zhang said central government investment should be carried out in a "transparent and efficient" fashion, with strict market access standards in line with industry policies.
"Detailed plans on expansion of domestic demand over the next two years should be formulated as soon as possible," he said, adding that "measures to maintain stable export growth should be formed without delay," along with a program on reviving pivotal industries.
"The stability of agriculture is essential against a backdrop of an international financial crisis," said Zhang, adding that efforts should be stepped up to increase agricultural production and farm incomes.