Tags: china | inflation | growth | asia | economy

China Pledges to Tackle Inflation, Growth Model

Sunday, 12 Dec 2010 02:07 PM

China’s leaders pledged to accelerate a shift in the nation’s growth model in 2011 and also focus on stabilizing prices after an annual meeting in Beijing to set economic policy guidelines.

The state-run Xinhua News Agency reported on the outcome of the so-called Central Economic Work Conference, attended by President Hu Jintao and Premier Wen Jiabao. Its initial accounts didn’t give any specific targets for growth, inflation or lending. The government reiterated its intention to keep the currency stable.

China is seeking to shift from dependence on investment in industry and exports to bolstering private consumption and service industries, a move that could also aid the world economy. The nation is tightening monetary policy to cool inflation that accelerated to 5.1 percent in November, the fastest pace in 28 months.

“The top concern for the government next year will be to contain inflation, stabilize growth and spur consumption,” Lu Zhengwei, a Shanghai-based economist with Industrial Bank Co., said before today’s announcement.

U.S. lawmakers and officials say a stronger Chinese currency would help to reduce global trade imbalances, boost private consumption and contain inflation.

Yuan ‘Stability’

The government aims to improve the renminbi’s exchange- rate mechanism and ensure “basic stability” at a reasonable and balanced level, Xinhua said. The report didn’t comment on the pace of currency appreciation. The nation will focus on encouraging imports as well as exports, it added.

Today’s comments alluded to the risks from the record lending that jump-started the Chinese economy during the financial crisis, including concern that banks will be saddled with bad loans to local-government financing vehicles.

China will step up management of local-government debt and prevent officials “blindly” starting new projects as a the next national five-year plan begins, Xinhua reported. Officials will also seek to better manage liquidity, the news agency said.

The meeting affirmed the “prudent” monetary policy and “proactive” fiscal stance for next year that the Politburo described on Dec. 3. Wen summarized the coming year’s economic tasks, and laid out key targets and macro-economic policies, the report said. The government will seek to boost revenue and “resolutely” cut spending, Xinhua said.

Fast Growth

Officials aim to balance “stable and relatively fast” growth with adjusting the economic structure and managing inflation expectations, the report said. The nation needs to strengthen consumption as part of speeding change in the growth model, it said.

China should “move quickly and aggressively to deal with inflation” before tackling longer-term tasks such as boosting the role of private consumption in the economy, Stephen Roach, non-executive chairman at Morgan Stanley Asia Ltd. said Dec. 9 in Hong Kong.

The central bank raised lenders’ reserve requirements on Dec. 10 as part of efforts to tame liquidity and cool prices. The government will “further prioritize overall price stability,” Xinhua reported today.

Central and provincial government officials and heads of state-owned enterprises attend the work conference, which fleshes out policy guidelines for the following year.

In 2011, the main tasks will include strengthening macro-economic controls; ensuring the supply of agricultural goods; altering the growth model; improving basic public services; and continuing to “open up” and promote global cooperation, the report said.

The government will steadily increase the area of land used for food production, as well as state prices for food purchases from producers and subsidies for agricultural output, Xinhua said.

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China s leaders pledged to accelerate a shift in the nation s growth model in 2011 and also focus on stabilizing prices after an annual meeting in Beijing to set economic policy guidelines. The state-run Xinhua News Agency reported on the outcome of the so-called Central...
china,inflation,growth,asia,economy
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2010-07-12
Sunday, 12 Dec 2010 02:07 PM
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