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UPDATE 1-China to deliver promised stimulus by end of 2010

* Govt sticks to pledge to spend 1.18 trln yuan of own cash

* Slightly more spent in 2009 than originally planned

* Budget targets on track -vice finance minister (Adds comments, background)

BEIJING, Dec 24 (Reuters) - The Chinese government will deliver on its commitment to spend 1.18 trillion yuan ($173 billion) before the end of 2010, the core of the country’s stimulus package, a deputy finance minister said on Thursday.

The central government has pledged that amount out of its own pocket to support the overall 4 trillion yuan stimulus programme, credited with helping the world’s third-largest economy recover from the impact of global financial turmoil.

The promise not to pull back could serve to reassure markets hit by concerns over tightening in the property sector and worries that tougher lending practices could slow growth from the 8.9 percent annual pace in the third quarter.

Deputy Finance Minister Zhang Shaochun told reporters that actual spending in 2009 would slightly exceed the originally planned 487.5 billion yuan, after it doled out 104 billion yuan for the stimulus package in late 2008.

That could mean somewhat less than 588.5 billion yuan gets spent next year, as originally earmarked, but the overall amount of spending from central coffers would remain the same, he said.

“There is no change regarding the 1.18 trillion yuan government spending plan,” Zhang told a news conference.

Beijing has said it would maintain its proactive fiscal policy and appropriately loose monetary policy stance in 2010, something Zhang reiterated.

The need to keep government investment at a high level was underlined by a government work group that oversees the stimulus spending.

“China is facing a very complicated situation in its economic development, with favourable and unfavourable impacts rising at the same time,” the work group said in a statement given to reporters ahead of the news conference.

That assessment was echoed by Li Rongrong, head of the state-owned enterprises watchdog, who said in a speech that the economic recovery was not yet on solid ground.

“Investment and overall consumption are growing rapidly mainly because of policy factors, but consumer spending is still inadequate and exports have plunged because of a slump in international demand,” Li said, according to a summary of his speech released by the agency.

Beijing is on track to achieve its budget targets this year, Zhang added. The central government has been aiming for a fiscal deficit of 950 billion yuan, or roughly 3 percent of gross domestic product.

Mu Hong, deputy head of the National Development and Reform Commission (NDRC), the powerful planning agency, told reporters at the same news conference that the government would aim to keep this year’s investment momentum in 2010.

Urban investment was up 32.1 percent in the first 11 months compared with a year earlier.

However, the desire to keep the economy humming has not stopped authorities from tweaking policy to make growth more sustainable.

In the latest such move, the central bank, banking regulator and other agencies issued a joint statement on Wednesday vowing to exercise stricter control over bank lending next year.

They outlined plans to guide credit to new energy projects and consumers, while choking off financing to polluters and sectors riddled by overcapacity. [ID:nTOE5BM03X] ($1=6.83 yuan) (Additional reporting by Simon Rabinovitch; Editing by Tomasz Janowski)

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