Markets Cheer Chinese Economic Stimulus Plan

The Chinese fiscal stimulus package totaled $586 billion and was aimed at ensuring continued brisk economic growth in the face of flagging exports.

Asian stocks surged on Nov. 11 after China unveiled a huge economic stimulus plan and major economies pledged to do their utmost to fight the financial crisis. Hopes were growing that world leaders would take further steps to ward off a deep global recession and calm months of market turmoil when they meet in Washington for an emergency summit at the weekend.

Investors took heart from a Chinese fiscal stimulus package totalling four trillion yuan (US$586 billion) aimed at ensuring continued brisk economic growth in the face of flagging exports.

Chinese share prices soared 7.27% by the close while Tokyo ended 5.8% higher. Sydney added 1.4% as Seoul gained 1.6%.

The Chinese package "boosted markets due to the timing and the sheer magnitude of the aid," said Societe Generale strategist Kenichi Yumoto.

Australian Prime Minister Kevin Rudd described it as "an extraordinary fiscal stimulus package" that would boost the world economy. He also announced 3.2 billion dollars (US$2.2 billion) of financial assistance for the ailing Australian automotive industry.

The Group of 20 major wealthy and emerging nations meanwhile pledged on Nov. 9 to take "all necessary steps" to boost sagging market confidence and give a bigger voice to developing countries in global economic affairs. The finance ministers and central bank governors of the G20 nations meeting in Sao Paulo said there was consensus for major reforms of a global international financial system ravaged by a credit crisis.The meeting aimed to lay the groundwork for the November 15 summit on the financial turmoil hosted by US President George W. Bush.

Copyright Agence France-Presse, 2008

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