By Fergus Naughton 

I guess Christmas has come early in China. Beijing last night announced a RMB 4 trillion--or USD 586 billion--stimulus package to be initiated over the next two years in a bid to seal up the emerging cracks in the nation's economy. China's State Council, or cabinet, said it'll boost investment--upwards of some 13.5 percent of annual GDP--in ten key areas, and has already earmarked RMB 100 billion for spending this quarter.

Targets for heightened investment include low-cost housing, rural infrastructure, railways, power grids, post-earthquake rebuilding in Sichuan province and social welfare. The government will also review its value-added tax system to boost investment in new technology, which will save enterprises up to RMB 120 billion, and abolish loan quotas to accelerate credit growth. The government says this reflects an official change in policy to "proactive fiscal policy and appropriately accommodative monetary policy."

Still, such generic statements did little to fill in key details of the stimulus package, which appears to be more sweeping in scope than expected. Not everyone is convinced it will have the desired long-term impact. Some economists believe a number of the measures announced Sunday had already been introduced earlier, and that Beijing's latest decree is merely an effort to shore up positive sentiment. "The size of this stimulus package--which is expected to be in the form of additional spending--may have been overstated," said Sherman Chan, an economist at Moody's economy.com. "For instance, post-earthquake reconstruction was said to have cost the economy RMB 1 trillion. The exaggeration highlights the government's desperation to revive sentiment, which is perhaps the key factor to sustaining growth amid global turmoil."