China announces a stimulus plan

China unveiled a $586 billion stimulus package Sunday in its biggest move to inoculate the world's fourth-largest economy against the global financial crisis.

Chinese and Japanese stocks soared today in early trading after the government's announcement.

The Cabinet approved a plan to invest the money in infrastructure and social welfare by the end of 2010, according to a statement on the government's Web site.

Some of the money will come from the private sector. The statement did not say how much of the spending is on new projects and how much is for speeding up ventures already in the pipeline.

China's export-driven economy is feeling the pinch of weakening U.S. and European economies. The government has already cut key interest rates three times in less than two months in a bid to spur economic expansion.

Economic growth slowed to 9 percent in the third quarter, the lowest level in five years and a sharp decline from last year's 11.9 percent.

That is considered dangerously slow for a government that needs to create jobs for millions of new workers who enter the economy every year – as well as satisfy a public that has begun to expect steadily rising incomes.

Exports have been growing at an annual rate of more than 20 percent, but analysts expect that growth rate may fall as low as zero soon as global demand weakens.

The International Monetary Fund has urged governments to adopt stimulus packages and, in some cases, to cut interest rates.

China joins the U.S., Japan and Germany, which have already introduced their own stimulus plans.

The U.S. allocated $168 billion for tax rebates to individuals and tax breaks for businesses. Germany set aside $29 billion for tax breaks on new cars and credit assistance for companies. Japan allotted $275 billion for loans to small and midsize businesses, and other measures.

On Wednesday, finance officials from the G-20 group of major wealthy and developing nations will convene in Washington to discuss a strategy for strengthening the global economy.

The statement said the spending would focus on 10 areas, including housing and rural infrastructure.

Spending on health and education will be increased, as well as on environmental protection and technology.