China's 4 trillion yuan (about US$588 billion) stimulus plan is paying off, providing the country with time to wait for a revival of the world economy, said experts.

Four months after China launched the two-year investment plan, which is intended to revitalize the world's third-largest economy, its industrial output growth appears to be recovering and the decline in its imports has started to ease.

Industrial output grew 3.8 percent in the first two months this year, down from the 5.7 percent increase in December.

The government did not release the January industrial output figure separately from the two-month total, but said output grew 11 percent in February.

That increase was the first double-digit monthly gain since October, the National Bureau of Statistics said on Thursday. It should be noted that February statistics have all been affected by the shift in the Lunar New Year, which came two weeks earlier this year than in 2008 and resulted in more working days in the second month.

"Statistics of industrial output last month signaled a good start of this year's production," Zuo Xiaolei with Galaxy Securities told Xinhua. It reflected the impact of the stimulus package on economic growth, she said.

Industrial power use, cement output, coal and steel production all grew year-on-year in February, even as the global downturn cut China's exports to 10-year lows.

China has been relying heavily on exports, one of the country's three growth drivers, to sustain double-digit economic expansion. But now it is seeking to raise domestic demand to support its own growth and that of the world economy.

One sign this might be working is that imports, although still falling, declined less severely last month. Imports fell 24.1 percent in February compared with 43.1 percent in January. That suggested reviving domestic demand, a sign that might herald an overall recovery, said Zhang Yansheng, director of the foreign economic research institution with the National Development and Reform Commission.

While the latest statistics don't conclusively prove that the economy is growing strongly again, they do provide room for optimism, said Zhang.

In the government work report delivered March 5, Premier Wen Jiabao set the annual gross domestic product (GDP) growth target for 2009 at 8 percent. A United Nations report, "World Economic Situation and Prospects 2009", estimated China's GDP would grow 8.4 percent this year.

The country remains an engine for East Asian and even global growth, as world gross product was expected to expand only 1.0 percent this year, down sharply from 2.5 percent in 2008, it said.

China contributed about 22 percent of global growth in 2008 and would likely to contribute a higher proportion this year, as most developed economies had been dragged into recession, it said.

To achieve this goal, China is beefing up government spending and launching a large-scale industrial restructuring campaign to rebalance the economy, to ensure both immediate and long-term economic development.

The UN report, issued in January, estimated the government package would provide an additional stimulus of about 2 percent of GDP per year.

Most experts interviewed by Xinhua said the 8-percent target was hard but reasonable. "The huge amount of government investment would give the economy a strong boost ... GDP growth this year might be 8 percent or higher," economist and political advisor Li Yining told Xinhua.

If China could maintain steady and relatively fast development, it would make a major contribution to the global economy, said LinYifu, chief economist of the World Bank, earlier this month.

China could create more market opportunities for the world, and the country's industrial upgrading would generate considerable demand for more capital goods, many of which would come from the developed countries, Lin said.

Steady domestic growth would also guarantee stable returns on the investments made by developed countries in China, said Zhang Junsheng, an economics professor at the University of International Business and Economics.

At the same time, China's huge foreign exchange reserves meant that the country was in a strong position at a time when the international banking and manufacturing sectors were experiencing a serious lack of liquidity.

China signed contracts worth more than US$10 billion during a trip to Europe last month and was sending more delegations overseas to discuss further investment and cooperation.

Commerce Minister Chen Deming said at the end of the European trip that the government would maintain its policy of opening its markets, despite the tough economic challenges ahead.

In a broader sense, China's relatively fast economic growth has helped strengthen international cooperation to withstand challenges, as well as boost the world's confidence in combating the financial crisis.

Although China's economy couldn't completely recover until the global downturn ended, the stimulus plan could support growth until consumers in developed countries regained their purchasing power, said Zhang. This in itself would be a major contribution to the revival of the global economy as a whole, Zhang said.

(Xinhua News Agency March 15, 2009)