Government and Policy

Macro-economic policies to continue: Premier

(Xinhua)
Updated: 2009-12-27 20:17

BEIJING: China will maintain its pro-active fiscal policy and moderately loose monetary policy to buoy the economy in 2010 as many uncertainties persisted at home and abroad, Chinese Premier Wen Jiabao said on Sunday.

Averting the trend of falling global demand remained difficult, Wen said in an exclusive interview with Xinhua.

"Economies of some countries are starting to pick up, but fluctuations are still possible," Wen said.

"China's economy has been on track for recovery. However, the economic performance and operations of enterprises still mainly rely on support from government's policies" Wen said.

"A consolidated recovery in the country's economy does not point to a complete revival and a full revival does not mean China's economy is developing in a sustainable way," Wen said.

"To withdraw macro-economic policies too early will likely ruin the efforts made before and reverse economic development," Wen said.

The government would maintain the stability and continuity of macro-economic policies while comprehensively watching the domestic and foreign economic situations, Wen said.

The State Council, or the Cabinet, announced on November 5, 2008, that the government would shift the fiscal policy from "prudent to pro-active" and the monetary policy from "tight to moderately loose" to stimulate the economy by expanding domestic demand to offset a slump in exports.

The Cabinet also unveiled a 4-trillion-yuan ($585.6 billion) stimulus package the same day.

"We have stabilized economic growth and employment and maintained social stability over the past year," Wen said. "The government's economic stimulus package has proved effective."

China's economy grew 8.9 percent in the third quarter, the fastest rate in a year, after expanding by 7.9 percent in the second quarter and 6.1 percent in the first three months, boosted by the massive government investment and record bank lending.

The People's Bank of China, the central bank, scrapped lending limits of commercial banks in November last year.

In the first 11 months of this year, new bank loans hit 9.21 trillion yuan, an increase of 5.06 trillion yuan over the same period last year, far exceeding the full year target of 5 trillion yuan the government set in March.

The government pledged at the Central Economic Work Conference earlier this month that it would stick to the pro-active fiscal policy and moderately loose monetary policy in 2010 to sustain a recovery backed by the stimulus package.

The government would adjust macro-economic policies in line with the changing economic situation and study issues arising during implementation of such policies, Wen said.

China would gear more investment to social welfare, technical innovation and energy conservation and emission cuts next year, Wen said.