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China is preparing additional stimulus measures to boost its economy and is expected to begin unveiling them at the opening session Thursday of the National People’s Congress, according to officials.

The government announced in November a Rmb4,000bn ($585bn, €465bn, £413bn) investment plan for the next two years. But the rapid deterioration in the global economy since then has put pressure on authorities to take additional steps to prevent a collapse in Chinese growth.

Li Deshui, a former head of the statistics bureau and ex-member of the central bank’s monetary policy committee said, that new spending plans would be outlined Thursday by Premier Wen Jiabao in a speech to the NPC, China’s legislature.

“In Premier Wen’s report … there will be an announcement of a new stimulus package,” he told reporters. Reuters cited an unnamed official at the country’s economic planning agency as saying that additional spending on infrastructure would be introduced.

Mr Li does not have a formal role in economic policy-making and gave no details about new spending. His comments were considered a strong indication of government thinking, however, and helped prompt the Shanghai stock exchange’s main index to rise 6.2 per cent on Wednesday.

Many of the details about the initial Rmb4,000bn investment plan remain unclear. But economists estimate that up to one third will be new money not already in the budget for the next two years and that the bulk will be invested in infrastructure projects. In a report released last week, Standard Chartered said officials in Beijing have been discussing the possibility of raising the investment plan to Rmb8,000bn-10,000bn.

The discussion about additional stimulus measures comes amid a growing debate about how Beijing should be spending the stimulus funds.

Some Chinese officials believe the best way to revive the economy is through further aggressive investment in infrastructure. Since November, the planning agency in Beijing has been inundated with Rmb16,000bn in infrastructure project proposals from local governments.

However, many economists in China argue that high growth will only be sustainable if the government takes decisive steps to reduce the importance of investment in the economy and encourage more domestic consumption.

He Fan, an economist at the Chinese Academy of Social Sciences, said the government needed to increase spending on social services and deregulate parts of the service sector in order to boost domestic consumption. “Building more factories will not solve the problem,” he said.

Ha Jiming, economist at China International Capital Corporation in Beijing, said an investment-led recovery could be short-lived because of weak underlying demand. “Chinese GDP may continue to rebound robustly in the second quarter due to full fiscal stimulus effects,” he said. “But it may decline remarkably in the fourth quarter due to falling credit, fading stimulus effects from infrastructure construction, and shrinking private demand.”

President Hu Jintao told a meeting of the ruling Politburo last week that “more forceful” measures would be taken to boost consumption.

A group of 16 Communist party elders warned President Hu in a letter published on a Chinese website on Wednesday that a huge scheme of public works could lead to widespread corruption if there was not more transparency about the spending.

A new purchasing managers index released yesterday provided tentative evidence that Chinese economy might be stabilising. The index from the China Federation of Logistics and Purchasing increased from 45.3 in January to 49 last month, although a reading below 50 still indicates the economy is contracting.