China remaining prudent and proactive for 2012
By Wang Yanlin |
December 15, 2011, Thursday
|
Print Edition
Print Edition
China will maintain a proactive fiscal policy and a prudent monetary policy in 2012, seeking faster economic restructuring based on stable growth and stable inflation, according to a statement issued at the conclusion of the three-day Central Economic Work Conference yesterday.
The monetary policy will be fine-tuned in tandem with changing economic conditions, the statement said, making the complete policy set next year flexible, targeted and forward-looking while still consistent with the current one.
"Facing complicated new changes at home and abroad, China should stick to economic restructuring and resort to expansion of domestic demand to stabilize economic growth," the statement said. "To spur domestic consumption, we will improve our social welfare network, further develop the services industry, increase middle-income population and encourage the development of the real economy."
It said China will keep its exchange rate "basically stable" and will stick "unswervingly" to tightening measures in the property industry.
Sun Lijian, an economics professor at Fudan University, said the main tone set for next year's economic work stresses "stability and continuity" in policies.
"China's economy managed a relatively fast growth this year despite an unfavorable external economic climate," Sun said. "It is not a time for China to make an abrupt policy shift as growth momentum remains strong so far while inflation may rebound if policies ease too soon."
The Consumer Price Index, the main gauge of inflation, hit a 14-month low of 4.2 percent in November after tightening measures took effect. However, it was still higher than the official target of below 4 percent.
China's gross domestic product expanded 9.4 percent from a year earlier in the first three quarters, slower than last year's 10.4 percent but better than the 8 percent target.
But exports will become a huge drag on China's economy next year and that may require policy fine-tuning to support growth.
"Weaker external demand poses the biggest downside risk to China's growth," Chang Jian, an economist at Barclays Capital said.
China's November exports expanded 13.8 percent from a year earlier, the slowest pace in nine months. But Chang said the worst was yet to come, and next year's export growth may weaken to around 10 percent from 20 percent this year.
UBS AG economist Wang Tao was even more pessimistic, saying China's export growth may drop to zero next year.
Correction in the property market is another major concern which could affect economic growth next year. But the statement said China will stick to its tightening measures until house prices return to a reasonable level.
Lu Zhengwei, chief economist at Industrial Bank, said that although the monetary policy was to be prudent, it would be pro-growth.
"Monetary polices will change from neutral-tightening this year to neutral-easing next year," Lu said.
Peng Wensheng, chief economist at China International Capital Corp, said that China's priority has moved from taming inflation to stabilizing growth.
The monetary policy will be fine-tuned in tandem with changing economic conditions, the statement said, making the complete policy set next year flexible, targeted and forward-looking while still consistent with the current one.
"Facing complicated new changes at home and abroad, China should stick to economic restructuring and resort to expansion of domestic demand to stabilize economic growth," the statement said. "To spur domestic consumption, we will improve our social welfare network, further develop the services industry, increase middle-income population and encourage the development of the real economy."
It said China will keep its exchange rate "basically stable" and will stick "unswervingly" to tightening measures in the property industry.
Sun Lijian, an economics professor at Fudan University, said the main tone set for next year's economic work stresses "stability and continuity" in policies.
"China's economy managed a relatively fast growth this year despite an unfavorable external economic climate," Sun said. "It is not a time for China to make an abrupt policy shift as growth momentum remains strong so far while inflation may rebound if policies ease too soon."
The Consumer Price Index, the main gauge of inflation, hit a 14-month low of 4.2 percent in November after tightening measures took effect. However, it was still higher than the official target of below 4 percent.
China's gross domestic product expanded 9.4 percent from a year earlier in the first three quarters, slower than last year's 10.4 percent but better than the 8 percent target.
But exports will become a huge drag on China's economy next year and that may require policy fine-tuning to support growth.
"Weaker external demand poses the biggest downside risk to China's growth," Chang Jian, an economist at Barclays Capital said.
China's November exports expanded 13.8 percent from a year earlier, the slowest pace in nine months. But Chang said the worst was yet to come, and next year's export growth may weaken to around 10 percent from 20 percent this year.
UBS AG economist Wang Tao was even more pessimistic, saying China's export growth may drop to zero next year.
Correction in the property market is another major concern which could affect economic growth next year. But the statement said China will stick to its tightening measures until house prices return to a reasonable level.
Lu Zhengwei, chief economist at Industrial Bank, said that although the monetary policy was to be prudent, it would be pro-growth.
"Monetary polices will change from neutral-tightening this year to neutral-easing next year," Lu said.
Peng Wensheng, chief economist at China International Capital Corp, said that China's priority has moved from taming inflation to stabilizing growth.
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