Many of China's main economic drivers are struggling amid the global crisis and the government is hoping tax breaks and subsidies for them will just as crucially boost domestic demand and get consumers to spend, they said.

"It has become fashionable around the world for government to take over and help troubled industries, so China is doing nothing different," said Dong Tao, a Hong Kong-based economist for Credit Suisse.

"These measures tend to be wide in scope and are being implemented quickly with the obvious major target being aimed at boosting confidence.

"The government is saying it will not tolerate recession."

The automotive bailout package announced Wednesday included a cut in the sales tax to five percent from 10 percent for cars with engines smaller than 1.6 litres, from January 20 until the end of the year.

The package from the State Council, or cabinet, also included a 10 billion yuan (1.5 billion dollar) subsidy to help car makers upgrade technology and develop alternative-energy vehicles over the next three years.

"In order to adjust and revive the auto sector, we must implement a proactive consumption policy ... to stabilise and boost auto demand," the policy initiative on the government website said.

The cabinet also flagged help for its steel industry, which has seen roaring growth in recent years come to a near standstill amid lower demand both at home and abroad due to the crisis.

The cabinet said it would restrict new capacity in the steel sector and adopt a "flexible policy" on the exports of steel in order to stabilise China's share of the global market.

No other details on supports for the steel industry were offered.

Similar aid is expected to soon be announced for eight other industries, including shipbuilding, petrochemicals and textiles, according to state-run media reports posted on the government website.

Andy Xie, a Shanghai-based independent economist, said the government's plans were part of a measured approach to the slowdown, which has taken an increasingly heavy toll on China's economy.

"China is doing a lot of things, but nothing too radical, small steps to ensure that we don't see a reversal of the market," he said.

The brunt of China's economic policy would remain focused on boosting domestic consumption, while supports for heavy industry such as shipbuilding and petrochemicals will centre on tax cuts and preferential lending, he said.

"A lot of the measures to support industry will be aimed at boosting confidence to support the stock market because a lot of policy-makers think that by boosting the stock market the economy will follow," Xie said.

Data due out next week is expected to see China show its economy recorded growth of about seven percent in the final quarter of last year, nearly half as slow as the 13.0 percent recorded in all of 2007.

Beijing had already unveiled a four-trillion-yuan (590-billion-dollar) spending programme in late 2008 to revive the economy.

It was unclear if the auto package or any of the other industrial support measures will be considered a part of this or new spending.

With the auto policy, the government in particular wants to promote the mass production of electric cars in big and medium-sized cities, the policy announcement said.

The package also calls for five billion yuan to be spent as subsidies for farmers who opt to replace three-wheeled vehicles or outdated trucks with new, small vehicles, it said.

Growth in the auto sector slowed to 6.7 percent last year, the lowest level in a decade, according to reports in the state media on Thursday, a dramatic slowdown from 2007 when the industry enjoyed growth of 21.8 percent.

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