China to keep steady policies and deepen reforms in 2013

BEIJING

Boards displaying prices hang above a worker as she collects dates for a customer at a food market in central Beijing. Chinese government will push forward further economic reforms. REUTERS photo

China will maintain a “prudent” monetary policy and a proactive fiscal policy in 2013, leaving room to maneuver in the face of global uncertainties, Xinhua news agency said after the country’s annual policy-setting conference yesterday.

Chinese leaders will also push forward the next stage of economic reforms “with greater political courage and wisdom,” the agency said. “China will continue to implement the proactive fiscal policy and prudent monetary policy in 2013,” Xinhua said after the close of the annual Central Economic Work Conference in Beijing, the first such meeting under the new Communist Party leadership. “The proactive fiscal policy will be combined with tax reforms and structural tax cuts and the prudent monetary policy will pay attention to dynamism and enhance operational flexibility,” it said.

China’s central bank has kept a prudent monetary policy since late 2010 that has encapsulated at first modest tightening and then modest loosening following the global financial crisis.

Fiscal policy has been proactive, or expansionary, since late 2008, when Beijing unveiled a 4 trillion yuan stimulus package after the economy took a big hit during the global financial crisis. China’s annual economic growth dipped to 7.4 percent in the third quarter, the weakest pace since the depths of the global financial crisis in early 2009, but growth has been picking up steadily since October thanks to a raft of pro-growth policies.

Increase of domestic demand

China’s vast manufacturing sector expanded in December at its fastest pace in 14 months as new orders and employment rose, a survey showed recently, adding to evidence of a pick-up in the economy that helped to boost market sentiment. Communist Party chief Xi Jinping has signaled a commitment to deepening economic reforms by visiting the southern Chinese city of Shenzhen last week, echoing groundbreaking comments by reformist senior leader Deng Xiaoping during his famous “southern tour” to the same area 20 years ago.

Another priority will be the increase of domestic demand, state media said. “Expanding domestic demand will be a strategic basis for China’s development next year,” said Xinhua. China’s economy has for most of the past three decades relied on taking advantage of a large and cheap labor force to become the world’s largest manufacturer by exporting to global consumer markets. But Beijing now hopes to achieve more balanced growth and needs to tap into the potential of its own consumers to do so, as big economies such as the United States and Europe face difficulties. Toward that end, China will boost imports “to support the country’s economic restructuring,” Xinhua said.

But, it said, “China will also stabilize and increase its share of world markets,” suggesting the country will seek to remain an export powerhouse.

The closed-door Central Economic Work Conference brings together China’s top leadership, provincial officials, ministers, regulators and the central bank chief as well as the heads of the top state firms and banks.

Compiled from Reuters and AFP stories by the Daily News staff.