China's new fiscal stimulus package on Monday animated financial markets desperate for any signs of good economic news around a world confronting a significant slowdown. Yet the package's announcement has also left many questions unanswered.

Beijing announced on Sunday that it would spend Rmb 4,000bn ($586bn, €458bn, £373bn) - an amount equivalent to 15 per cent of gross domestic product - on infrastructure and social welfare over the next two years to prevent the economy from slowing too rapidly.

The authorities had been expected to unveil new fiscal measures later in the month after a summit of economic policymakers in Beijing. However, the announcement appears to have been hastily pushed forward.

Anecdotal evidence from a range of different companies in China suggests that the economy slowed sharply in October and some economists had downgraded next year's growth estimate to 5-6 per cent in the absence of strong fiscal action. Economists say the government wanted to deliver a strong signal about its spending plans before the official October data were released.

Qing Wang, an economist at Morgan Stanley, saidSunday's "unusually strong statements suggest the authorities are very eager to boost private sector confidence through making a very strong commitment to maintaining strong growth".

The new fiscal package also comes ahead of Hu Jintao, the president, visiting Washington for Saturday's G20 summit on global financial reform. The package allows Mr Hu to demonstrate China is taking decisive action to stimulate its own economy at a time when it could face demands to provide substantial assistance to other countries.

"Our top task is maintaining steady and relatively fast economic growth," Wen Jiabao, prime minister, said on Monday.

The high-profile announcement achieved some of its goals by reassuring both a domestic and international audience that the government would do what it takes to prevent growth falling below 8 per cent - an important psychological mark. "Does anyone still doubt that China can maintain above 8 per cent growth in 2009?" said Frank Gong, economist at JPMorgan.

However, there still remain plenty of questions about the real substance of the fiscal package. The authorities said the investment would go to 10 target areas including roads and education, but gave no details about how exactly the money would be spent or how much of it would be genuinely new spending not already in the pipeline.

Arthur Kroeber, managing director of Dragonomics in Beijing, said the actual extra investment as a result of the fiscal package might be as little as one third of the headline figure, at around Rmb 1,300bn. That is still around 2 per cent of GDP each year, but much less than initial reports suggested, largely because a lot of the likely investment in roads, rail, health, education and rural areas had already been announced.

The source of the new funding is also unclear. A leading Chinese academic in Beijing suggested that only a quarter of the investment might actually come from direct public spending, with the rest coming from state-owned enterprises and banks. As part of the fiscal stimulus announcement, the government confirmed that quotas on new bank credit had been lifted and that banks would be encouraged to lend to small companies, rural areas and industries that were consolidating or investing in technology.

Senior Chinese bankers suggested that they would be wary of expanding credit too quickly. Fan Yifei, deputy president of China Construction Bank, said that the bank's loans had increased by 11-12 per cent annually during the credit restrictions. "Without these limits, there is great potential to expand the loan book, but we do not believe we should increase loans by more than 20 per cent," he said.

Economists said there were several positive aspects to the new spending plans. While previous efforts at fiscal stimulus had focused largely on infrastructure, the new package also aimed to boost consumption through health and other rural spending, although the authorities had so far shied away from personal tax cuts.