INFRASTRUCTURE BOOM: The government is investing heavily in  infrastructure projects to spur the economy, especially ones that will help it realize its long-term development strategies (SHEN JUNCHUAN)

Shockingly weak exports, lukewarm real estate markets and withering industrial profits are painting a bleak picture for the Chinese economy this year. The Chinese Government is seeking to spend its way out of trouble, just as other countries are doing, by pumping steam into the manufacturing and consumption markets to soften the blow of the worldwide economic downturn. But unlike China, the other countries do not have such wide budget flexibility and a solid financial base to deliver a blockbuster stimulus package that at the same time will not bust the central budget.

So far, the country's 4-trillion-yuan ($586 billion) spending program has eclipsed packages put forth by most other countries, not to mention a basket of supportive follow-up moves. And more importantly, the Chinese Government now seems determined to do more.

Xie Xuren, Minister of Finance, reiterated the government's commitment to further widening public investments this year during the National Finance Work Conference in Beijing on January 6. Projects that facilitate economic rebalancing and improve people's livelihoods will top the government's agenda, he said.

Meanwhile, the chilly economic climate has become a catalyst for the country to accelerate its long-stalled industrial restructuring, improve the rural economy and bolster the quality of life of ordinary people.

"Some social and economic reforms with strategic implications like improving the rural medical care system were glossed over in the boom times," said Tan Yaling, a senior economist at the China International Economic Relations Association. "Now, they have finally regained the attention that they deserve. Moreover, they could add incentives for people to increase consumption, eventually driving up the economy."

The government also is sending a message that it will not just set its sights on infrastructure projects such as railways and airports, which can quickly create jobs and bring instant demand.

As a key part of its 2009 budget plan, the government will extend more financial support to agriculture, technological innovation, environmental protection and rehabilitation projects in the earthquake-hit areas as well as the underdeveloped central and western regions, Xie said.

At the same time, the tax instrument will play a bigger role in its economic adjustments. The government could increase the export tax rebate to revive the export sector, Xie said.

"A series of favorable tax policies enacted last year will also continue into 2009, including the cancellation of interest tax on bank deposits, a unilaterally levied securities stamp tax on share sellers, and reduced tax rates on house purchases," he said.

But some resource-guzzling and highly polluting industries may be subjected to tougher tax policies, Xie added.