China Inject £375 Billion In The Name Of Confidence

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In an effort to inject confidence into Asia's frightened markets China unveiled a huge economic package estimated at £375bn over the next two years.

The move is aimed at fighting the effects of a global slowdown and protecting its own economy in a region where China's financial stability is paramount.

In the biggest economic stimulus ever unveiled by the Chinese government, it said it will spend 7% of its gross domestic product each year to build new railways, subways and airports.

It will also rebuild communities in China's south west devastated by last May's earthquake.

"Over the past two months the global financial crisis has been intensifying daily," China's State Council said in statement.

"In expanding investment we must be fast and heavy-handed."

The move will be particularly good news for foreign investors in China's economy, ensuring that the country continues to be a source of growth.

Beijing said it was adopting a more "proactive fiscal policy", with state-owned banks being encouraged to lend more and loosen credit restrictions to encourage consumer spending.

The move comes a few days before the Chinese President Hu Jintao travels to Washington where he is expected to play a key role in the upcoming global financial summit hosted by US President George Bush.

To underline China's role in the new world economy, President Hu spoke by telephone with President-elect Barack Obama about how their countries could work together to help combat the world financial crisis.

Asian stocks and commodities climbed on Monday after China unveiled the stimulus plan.

Investors anticipated that China would remain a source of growth.