China moves to boost economy

By Kirby Chien and Anna Willard

BEIJING/SAO PAULO (Reuters) - China launched a huge stimulus plan on Sunday worth nearly $600 billion (383 billion pounds), kicking off what could be a round of big spending or interest rate cuts by leading economies to stave off a recession in many countries.

In Brazil, finance ministers and central bank governors representing 90 percent of the world's economy said they would take "all necessary measures" to get financial markets back to normal and counter the backlash of the credit crisis.

Many developed economies are now facing a contraction next year after lending from banks suddenly dried up, and newer powers such as China have been caught up in the domino effect.

World leaders meet next weekend to discuss precisely what measures they need to work out in coming months, and how much more say emerging economies will have over global finance.

China's official Xinhua news agency said the world's fourth-largest economy approved 4 trillion yuan (373.5 billion pounds) in new government spending between now and 2010, focussed largely on infrastructure and social projects.

The move was hailed by the head of the International Monetary Fund, Dominique Strauss-Kahn, who said it would have a positive effect on the world economy.

China's cabinet also announced a shift to a "moderately easy" monetary policy, suggesting more rate cuts.

"'Easy' monetary policy could mean, quantitatively speaking, more money supply and a looser market liquidity," the head of China's central bank, Zhou Xiaochuan, told reporters in Brazil. "It can also be reflected in prices, for example the bank lending interest rate could become lower."