China to shift to prudent monetary policy next year

Updated: 2010-12-03 16:38
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BEIJING - China will shift its monetary policy stance from relatively loose to prudent next year, the Political Bureau of the Communist Party of China (CPC) Central Committee decided Friday.

The meeting, chaired by President Hu Jintao, also general secretary of the CPC Central Committee, agreed the country would continue the proactive fiscal policy next year. To accelerate the transformation of the economic development pattern should be the main focus of next year's work, and macro-regulation should be "more targeted, flexible and effective," according to a communique issued by the committee.

In late 2008, China shifted its fiscal policy from "prudent" to a "proactive" stance and eased monetary policy from "tight" to "moderately loose," to counter the global financial crisis. China has faced complicated social and economic conditions since early this year. Thanks to the stimulus package and efforts to speed-up economic restructuring, China has maintained a relatively fast economic growth, it said.

"The momentum of economic and social development has been consolidated," it said.

"The conditions in China provide a sound base for stable and fast growth next year, but the country will face many difficulties and challenges," it noted.

The meeting called for heightened awareness of risks, as well as more efforts to consolidate success in the fight against the financial crisis, keep steady and relatively fast economic growth and promote social harmony and stability.

China's economy grew 9.6 percent year-on-year in the third quarter this year, slowing from its 10.3-percent increase in the second quarter this year and 11.9 percent in the first quarter. The People's Bank of China, the central bank, hiked the benchmark interest rates in October and raised the reserve requirement ratio for banks twice in a month, indicating the government's concern about rising inflation.

Soaring food prices pushed up the consumer price index, a major gauge of China's inflation, to a 25-month high of 4.4 percent in October, exceeding the government's target ceiling of three percent for this year.

More efforts will be made to ensure market supplies, stabilize prices and regulate market order next year, the communique said. During next year's economic work, the government will further improve policies to boost domestic demand, especially consumption, and promote imports.

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It also vowed to continue efforts to promote energy saving and emission cutting and enhance international cooperation to tackle climate change. Days before the Political Bureau meeting, President Hu chaired a meeting to solicit opinions on economic work from non-CPC party personages. Premier Wen Jiabao, top Chinese political advisor Jia Qinglin, Vice President Xi Jinping and Vice Premier Li Keqiang attended the meeting Tuesday.

"Next year marks the start of China's 12th Five-year Plan (2011-2015). It is of great importance to better deal with the economic work," Hu said at the meeting.