China announced on Sunday that it will enact a stimulus package estimated to be around 4 trillion yuan, or around US$580 billion, government media agency Xinhua reported.

The announcement shows that the country’s leaders are concerned about the country’s economic growth prospects.

Xinhua quoted China’s State Council as saying, "With the deepening of the global financial crisis over the past two months, the government must take flexible and prudent macro-economic policies to deal with the complex and changing situation.”

"They realize this is really about sentiment and confidence, which needs a very fast and strong policy response," Wang Qing, an economist with Morgan Stanley, told The Wall Street Journal.

The stimulus package will involve loosening credit conditions, cutting taxes and embarking on a major infrastructure spending program “in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand,” Xinhua said.

The money “will be spent over the next two years to finance programs in 10 major areas, such as low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding from several disasters, most notably the May 12 earthquake,” Xinhua reported.

In addition, China will reform its value-added tax assessments, which it estimated could cut industry costs by about 120 billion yuan. Also, Xinhua said, “Commercial banks' credit ceilings will be abolished to channel more lending to priority projects, rural areas, smaller enterprises, technical innovation and industrial rationalization through mergers and acquisitions.”

The announcement comes in advance of October economic data, which are expected to show further declines in growth, as the export-driven country feels the pinch of economic weakness from its trade partners such as the U.S. and European countries, as well as internal spending pullbacks by consumers.

Xinhua noted that the consumer-price index, a measure of inflation, is expected to drop further through the end of the year. It reached a 12-year high of 8.7% in February, and was already down to 4.6% in September.

"As long as we take the right measures in a resolute and timely way to grasp the chance and rise to the challenges, we will surely secure steady and relative fast economic growth," Xinhua quoted the State Council as saying.