China's Economy May Recover in First Half, Deputy Central Bank Chief Says

March 3 (Bloomberg) -- China’s economy, the world’s third biggest, is “very likely” to recover in the first half of 2009, central bank Vice Governor Su Ning said in Beijing.

“We’re very confident,” Su told reporters at the annual meeting of the Chinese legislature’s advisory body today.

China is trying to reverse an economic slide that has cost the jobs of 20 million migrant workers after exports collapsed because of the global recession. The government may double a 4 trillion yuan ($585 billion) package of stimulus spending through 2010, according to Standard Chartered Bank Plc.

“The effects of the fiscal stimulus will start to be seen in the second half,” said Wang Qing, Hong Kong-based chief China economist at Morgan Stanley. “The bulk of the money is yet to be dispersed or even approved.”

Wang expects growth to slow to between 3 percent and 4 percent in the first half, picking up in the second for full- year expansion of 5.5 percent. That would be the weakest annual growth since 1990.

Su said “both monetary and fiscal policies are very important” in managing the economy. Finance Minister Xie Xuren reiterated today that the nation had a “proactive” fiscal policy.

The central bank has said it will make “moderate” use of interest rates this year after five cuts in the final four months of last year took the key one-year lending rate to 5.31 percent.

Houses, Roads, Power Plants

The nation’s slowdown has prompted speculation that the government will increase the stimulus package, announced in November last year, which includes spending on houses, roads and power plants. Central bank deputy governor Liu Shiyu said he hasn’t heard of a plan for an 8 trillion yuan package, the China Securities Journal reported on its Web site today.

Minister of Industry and Information Li Yizhong said today that the government’s 8 percent growth target for this year may be “ difficult” to achieve.

“It’s a tough target but we are confident of achieving the goal because the government has put in place policies to stimulate the economy,” Li said at the same meeting.

Premier Wen Jiabao will deliver his annual government work report on March 5 at the opening of the National People’s Congress in Beijing.