(From left) Finance minister of India P. Chidambaram, South African minister of finance Trevor Manuel, Brazil.s finance minister Guido Mantega and Chinese deputy minister of finance Li Yong at the G20 meet at Sao Paulo,Brazil, on Saturday. (PTI)

Beijing/Sao Paulo, Nov. 9 (Reuters): China approved a massive stimulus plan on Sunday worth nearly $600 billion to boost domestic demand as part of a global push for measures to soften an expected recession in many countries.

In Brazil, finance ministers, senior officials and leading central bank governors — representing 90 per cent of the world’s economy — tried to find ways to shield their economies from the backlash of the credit crisis.

“For those countries which are able, the encouragement is to take measures of support,” said French economy minister Christine Lagarde.

“The Chinese minister said they were determined to support internal demand,” she told reporters, referring to talks among countries in the Group of 20 in Brazil’s business capital Sao Paulo.

Chinese official news agency Xinhua said the plan approved by the cabinet in Beijing targeted investments in infrastructure, social welfare and other key sectors. The cabinet announced an explicit shift in monetary policy, which it now described as “moderately easy” and a long-awaited reform to the way value-added tax is calculated, giving companies an effective tax cut.

The head of the World Bank and other senior officials attending the G20’s annual meeting cited China as an important player in the attempts to kick-start growth.

China’s central bank governor, Zhou Xiaochuan, said on Saturday the Asian export powerhouse, one of the few remaining engines of global growth, wanted to maintain its economic expansion, which he forecast at between 8 per cent and 9 per cent in 2009.

Some economists have predicted growth in China could slow to less than 8 per cent next year, down from double digits in the past five years until this year.

Taiwan’s central bank unexpectedly cut interest rates by 25 basis points, its fourth reduction in just over a month as fears of a global recession threatens the export-led economy.

The finance chiefs attending the G20 meetings in Sao Paulo are trying to come up with proposals for their leaders to take to an emergency summit on the financial crisis next weekend in Washington.

US bank closures

Regulators have closed two more US banks, taking the total number of bank failure this year to 19.

Texas-based Prosperity Bank agreed to assume the $3.7 billion in deposit held by the failed Houston-based Franklin Bank and purchase $850 million in assets, leaving the Federal Deposit Insurance Corp to dispose off the remaining $4.25 billion, the Wall Street Journal reported.

The other bank, Los Angeles-based Security Pacific Bank’s $450 million deposits were assumed by Pacific Western Bank. The cost to insurance fund is estimated at $210 million, the paper said.