The Current Global Financial Turmoil

　　UBS on Monday, Oct. 6,2008, lowered its forecast for China's gross domestic product growth in 2009 to 8.0 percent from 8.8 percent, citing a much weaker global growth outlook and forecasts of a deeper and longer U.S. recession.

　　Chinese government is determined to take some certain measures to sustain its economical growth.

　　Top on the list is that a stimulus plan is going to inject $586 billion into China's economy. China has announced a four trillion yuan ($586 billion) stimulus package, the largest in the country’s history. Unveiled by China's State Council on the evening of Sunday November 9th, the two-year spending initiative will inject funds into ten sectors, including health care, education, low-income housing, environmental protection, and schemes to promote technological innovation, transport(jumbo aircraft plan) and other infrastructure projects(railways, highways etc).

　　China’s government has so far provided few details of when the money will be spent or how it will be divided. Officials do say that fourth quarter investment for this year will total 400 billion yuan, including 20 billion yuan brought forward from next year's central government budget. If fully realised, the two-year spending spree would amount to about 16% of China's annual gross domestic product.

　　Another measure to be taken by Chinese government is Scale of VAT Reduction.

　　A plan for the full-scale transformation of value-added tax (VAT) drafted by the Ministry of Finance (MOF) has been submitted to the State Council for approval. Highlights of the plan include full amount deduction and whole industry transformation, and the scale of the tax reduction can be expected to reach over Rmb100 billion. It is suggested the plan should be implemented on 1 January 2009.

　　It is suggested in the new plan that the restriction on increment tax will be abolished, allowing enterprises to deduct the full amount of the input tax for their newly purchased machinery and equipment from their sales tax. It is also proposed that the restriction on industry will be lifted, thus allowing all industries to fall within the scope of VAT transformation, with the exception of those industries prohibited for development by the state.

　　It means that it will save more money than ever to purchase a machine (including machine tool). This is truly good news to the manufacturing and machine equipment sector.

　　Further more, Chinese government will fully implement the Jumbo Aircraft Plan and have chosen Shanghai as its key base.

　　The Shanghai government signed a deal with China's biggest aerospace company to build a national-level base in the city. www.eastpo.net

　　The deal will help realize the country's ambition to develop its own aerospace industry.

　　The two sides will also form a venture in Shanghai to design and make aircraft engines for domestic and overseas plane makers, the municipal government and the Aviation Industry Corp of China announced at the ongoing air show in southern China's Zhuhai City, Guangdong Province.

　　The venture, which will be mainly focused on engine production for commercial flights, will develop engines for China's first 150-seat passenger plane and may eventually make parts and equipment for overseas aircraft as well, Lin Zuoming, president of AICC, said yesterday.

　　It will develop engine parts, air and ground equipment, take-off and landing gear, cockpit instruments, navigation and radio communications equipment and more, according to Lin.

　　The base will also develop helicopters, unmanned aerial vehicles and other medium and small aircraft.

　　China will develop an aerospace industry and build its own 150-seat jumbo jet, according to Zhang Qingwei, board chairman of the Commercial Aircraft Corporation of China Ltd (COMAC).

　　COMAC, maker of the country's first regional ARJ21 jet, was launched in Shanghai in May with an initial investment of 19 billion yuan.

　　We can fully believe that China’s economy will be healthy and strong, even though the growth rate is lowering a little bit.