Stimulus proposals for the textile, equipment manufacturing and shipbuilding industries are likely to be submitted to the State Council for approval today, the Shanghai Securities News said.
Textile products are expected to get tax rebates of up to 15 percent, while equipment manufacturers could receive low-rate loans, tax privileges and research and development funds, unnamed sources were quoted as saying.
Stimulus packages for the petrochemical, non-ferrous metal and electronic information industries will be announced later, followed by light industries such as paper manufacturing.
Mainland currency and stock markets were boosted by the news and by a report that the National Development and Reform Commission has launched the second phase of the 4 trillion yuan (HK$4.53 trillion) stimulus plan. A total of 130 billion yuan will be spent in the second phase.
The Shanghai Composite Index climbed 2.44 percent to a seven-week closing high of 2,060 points. Turnover increased to 96.5 billion yuan. The yuan spot price was steady, closing slightly higher at 6.8403 to the US dollar. But the five-year yuan non-deliverable interest rate swap jumped 2.01 percent, its highest level since mid-November.
Traders attributed the surge to hopes of more stimulus plans. Premier Wen Jiabao said on his European tour that it will be difficult to maintain 8 percent growth and fresh measures are needed.
JPMorgan chief economist Frank Gong said the biggest risks for China are deflation, a slumping property market and a sharp drop in exports. Stronger stimulus measures are expected, he said.
The International Monetary Fund yesterday reiterated its forecast for China's economy to grow 6.7 percent this year.
