BEIJING: China’s policymakers think they can stem a rapid rundown of their foreign exchange reserves and ease pressure on the currency by pump-priming the economy to meet this year’s growth target, sources involved in policy discussions said.

Beijing will channel funds mainly into infrastructure projects, including railways, roads and airports, and the central bank will cut interest rates and bank reserve requirements, policy insiders say, reigniting fears of reverting to an old stimulus playbook at odds with an official drive to reform the economy.

“If we can stabilize growth, yuan depreciation expectations could be changed,” said an influential economist who advises the government.

“We need to stabilize growth by stepping up fiscal policy support,” he said.

But meeting an arbitrary growth target might not satisfy global markets, who are increasingly worried that imbalances in the economy are not being addressed.

Beijing, mindful of the lessons learned in 2008-09 when a massive stimulus package saddled the economy with debt, may assess spending plans more carefully this time and make sure projects are financially sound, policy insiders say.

A report by Citi economists said policymakers risked a deeper “recession,” which they defined as a significant increase in unemployment and excess capacity, if stimulus favored investment rather than encouraged a shift to consumption-driven growth.

The economists said they feared that “even if a timely fiscal stimulus is implemented, its composition is likely to be such that excess capacity in the traditional industries and sectors is enhanced, thus avoiding an early recession only by raising the risk of a later but deeper and longer recession.”

The signals are that spending will be directed to traditional engines. China’s top planning agency, the National Development and Reform Commission (NDRC), has approved about 800 billion yuan ($126 billion) of railway, port and highway projects so far this year.