China's economic recovery has positive but limited effect on world economic development, economist Fan Gang said at the China Development Forum 2009 on Saturday.

China is a developing country and its economic recovery will have limited effect on world economy, which would pull out of downturn only after the recovery of major economies, said Fan, secretary general of China Reform Foundation.

With the impact of the global financial crisis on the real economy still deepening, the world economy needs to be prepared for two years of recession, according to Fan, who is also a member of the central bank's monetary policy committee.

Fan said China was likely to hit the 8-percent economic growth target this year.

"The increase in new projects and signs of recovery in industrial production showed the governmental stimulus package has begun to take some effect," Fan said.

Beginning late last year, the government has announced aggressive measures to ease the domestic impact of the global downturn. These included a 4-trillion-yuan (US$585.7 billion) stimulus package, a plan to expand rural home appliance purchases and support plans for key industries.

Latest statistics showed in the January-February period, investment in projects authorized by the central government rose 40.3 percent, while spending on projects approved by local governments increased 25.1 percent.

Of 78,696 projects in progress nationwide, 18,533 were new, up 28 percent from a year earlier. Total planned investment in these projects was 743.7 billion yuan, up 87.5 percent, according to the National Bureau of Statistics (NBS).

Industrial output rose 11 percent in February, the first double-digit monthly gain since October.

Zheng Jingping, chief engineer of the NBS, described China's overall economic situation as "fairly good" backed by the measures to stimulate domestic demand.

However,it was still too early to tell whether or not the good signs would continue before March statistics came out, Zhang said.

Murilo Portugal, Deputy Managing Director of the International Monetary Fund, expected the global downturn to worsen in 2009. He forecast the world economy to decline 0.5 percent to 1.5 percent in 2009.

According to the previous forecast made by the World Bank, the world economy would fall 1.5 percent in 2009 from a year earlier.

A recovery might happen in 2010 if there are improvements in world economic data this summer, he said.

The China Development Forum 2009 runs here in Beijing from Saturday to Monday, with the theme of China's Development and Reform in the Global Financial Crisis.

(Xinhua News Agency March 22, 2009)