Ding Zhijie, an economist at the University of International Business and Economics, said the yuan might face greater depreciation pressure in the second and third quarter if the global financial crisis worsens.

But even that depreciation would be relatively mild and temporary, he said. "A possible scenario would be a depreciation of 1-2 percent against the dollar."

On domestic credit flow, Zhou said Beijing's target of disbursing 5 trillion yuan ($731 billion) in new loans this year was only a "guiding, not a binding" figure.

Enterprise bonds

Zhang Ping said China would increase its issuance of enterprise bonds to fund the stimulus package announced last November.

Enterprise bonds often refer to bonds issued by State-owned enterprises and must be approved by the NDRC, China's top economic planner. They are unlike corporate bonds issued by listed companies, which are under the purview of the China Securities Regulatory Commission.

Altogether, 45 enterprise bonds worth more than 130 billion yuan have been issued since the fourth quarter of last year, Zhang said.

In addition, more than 50 enterprises have applied for bond issuance worth 100 billion yuan and are pending approval, he said.

The country will also grant policy-related bank loans with a relatively longer maturity and low interest rates to fund some stimulus-backed projects, said Zhang.

The NDRC, together with the Ministry of Finance, the central bank and the China Banking Regulatory Commission have worked out a specific plan for such loans, he said.

"The issue of enterprise bonds will act as a supplement for large companies to raise funds. It is also expected to help develop China's bond market," Zhuang Jian, a senior economist at the Asian Development Bank, said.

The total volume of the bond market reached 15.11 trillion yuan by the end of last year, up 22.5 percent from 2007. Zhuang said the bond market would see continual growth this year due to the effect of the stimulus package.

Zhang said there are no plans for more stimulus spending this year and the government is watching closely to determine whether it needs to expand its huge stimulus effort.

"It really depends on the changing situation to determine whether we need additional investment," Zhang said.

Debt safe

Finance Minister Xie Xuren said China's outstanding debt level, expected to account for 20 percent of its GDP by the end of this year, is a safe ratio.

China has budgeted for a fiscal deficit of 950 billion yuan this year, 570 billion more than the previous year, Premier Wen Jiabao announced in his government work report on Thursday.

The record deficit will push the country's total outstanding debt to 6.27 trillion yuan, or 20 percent of the GDP, Xie said.

"Such a level is bearable considering our comprehensive national strength and is generally sound and safe," Xie said.

China's outstanding debt in 2008 accounted for 17.7 percent of its GDP.

(China Daily March 7, 2009)