China to keep policy stable, fend off global risks
Wednesday, December 14, 2011
SHANGHAI (AP) — Chinese leaders pledged to seek stable and more balanced growth while fighting inflation, ending a top-level economic planning session without major shifts in policy.
As expected, the annual economic work conference endorsed the ruling communist party’s agenda for keeping a “prudent” monetary policy to counter inflation and a “pro-active” fiscal policy to support growth.
The gathering also called for keeping the value of China’s currency, the yuan, “basically stable,” according to a statement issued by the official Xinhua News Agency.
With labor unrest flaring and financial conditions deteriorating across many sectors, from small companies to government-backed building projects, the mantra is “stability.”
That word was repeated five times in just one sentence of the dispatch that vowed continuity in policies for the sake of keeping social stability.
It pointed to “unsustainable contradictions, downward pressure on growth and inflationary pressures,” among a litany of risks, and urged “heightened awareness and a greater sense of urgency regarding the opportunities and risks to the country’s development from the global financial crisis.”
An expected transition next year to a new generation of communist leaders has accentuated Beijing’s obsession with keeping control.
China’s economy grew 9.1 percent in July-September but is expected to slow to below 9 percent growth in the coming year, as weaker demand at home compounds the impact from fragile conditions in Europe and the United States.
Given the weakness in demand for Chinese exports overseas, the leaders reiterated their intention to boost domestic demand to build an economy less dependent on foreign trade and investment.
There was no indication of any intention for major shifts in Beijing’s currency policy, a source of tension with the U.S. and other trading partners who say the yuan is undervalued, making Chinese goods relatively cheaper overseas.
The statement said China would continue with reforms to make the currency more “market oriented” while also gradually adjusting its controls on interest rates and other financial mechanisms and fine-tuning monetary policy in a “timely and appropriate way.”