China pledges to ensure stable, healthy economic growth in 2011

16:17, December 24, 2010      

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China will enhance and improve macro-economic regulation to ensure stable, healthy economic growth next year, and the macro-regulation in incoming 2011 should basically be proactive, stable, prudent and flexible, and the focus will be the better handling of the relationship between stable and relatively fast economic development, economic restructuring and inflation expectation in an active and stable way.

The Communist Party of China (CPC) Central Committee and the State Council have decided to continue to implement a proactive fiscal policy and a moderately easy monetary policy in accordance with new changes in both internal and external economic situation, This is of vital importance to doing a good job in next years.

As a part of the effort to strengthen and improve macroeconomic regulation, the recent Central Economic Working Conference proposes for implementing a good, proactive fiscal policy and a moderately easy monetary policy and ensure that China's economy will continue developing steadily, so as to take a substantial step in scientific progress and usher in a good start for the 12th Five-Year Plan period (2011-2015).

It is essential to continue implementing a proactive financial policy and instilling a fresh impetus for China's economic growth and structural adjustment. At present, China has both the necessity and feasibility to implement the proactive fiscal policy.

First of all, although the Chinese economy has already embarked on the normal growth track again gradually, there are still a host of unstable and uncertain factors, and the influence of global financial crisis on world economy has yet to be eliminated. So, China needs to intensify stimulation to spur economic growth.

Secondly, many infrastructural projects in China, which have already been under way, need a follow-up funding support, and this also calls for continuous implementation of the proactive fiscal policy and, thirdly, this fiscal policy is aimed mainly to solve the constitutive imbalance problem. Only through the continuous implementation of the proactive financial policy, can it contribute in stabilizing economic growth, improving the economic structure, adjusting distribution and promoting harmony.

At present, China's fiscal deficit and the government debt-GDP ratio are under the appropriate international accepted level. And China's sound fiscal and banking conditions and macroeconomic growth momentum have provided an adequate space for implementing a moderately easy monetary policy.

The primary contents or basic orientation of this fiscal policy is firstly to maintain a certain fiscal deficit and national debt scale, but is should be somewhat controlled as compared to a period of time during the 2009-2010 international financial crisis, Second, it is to optimize the expenditure structure, with more spending inclined to the livelihoods of people and "weak-links" in national economic and social development, and more money will be allocated to the "3 Rurals", (or rural villages, farmers and agriculture), and such domains as science and technology, education, health, culture, social security and with stresses on supportive indemnificatory housing, rural water conservation and transport facilities, urban public welfare facilities, health system as well as strategic emergency industries. Third is to continue implementing the constitutive tax relief for the low and relatively-low income families and, the fourth is to strengthen the debt management of local authority and guard against and defuse local fiscal risks, and bar them from putting up establishments blindly, rashly and too large on a scale.

By implementing the proactive monetary policy, we can increase monetary supplies to gradually match the macro economic growth in a bid to avoid an overall price rise on the one hand and, on the other hand to maintain the stable monetary supplies to promote the relatively stable economic growth, In addition, the American quantification relaxation of monetary policy will impact China's fiscal domain to some extent and, therefore, China needs to implement such a monetary policy to cope with the impact.

According to an overall plan of adjustment and optimizing structure appropriately, China will maintain the reasonable growth of currency supplies and total credit delivery quantities, so as to meet the needs of steady economic growth and rein the fluidity "sluice gate". Moreover, China strives to optimize its credit structure, release more to the "entity economies" to the "3 Rurals", small and medium-sized enterprises and the mid-west region in a bid to pay a role in serving the economic structural adjustment and maintaining the steady economic growth. China is to further consummate the RMB exchange rate formation regime reform and enhance its exchange rate elasticity, to maintain the RMB basic stability at the reasonable equilibrium level of exchange rate, and to maintain fiscal stability to guard against and defuse multiform financial risks.

All in all, the Central Economic Working Conference calls for paying close attention to instable and uncertain elements in global economy and for taking efficient, prompt counter-measures to dissolve influences in international economic environment, which are disadvantageous to Chinese economy.

Meanwhile, the recent rises in commodity prices and looming inflation in China have become an issue of increasing concern, not just to the Chinese government, but also to many ordinary citizens. In view of the growing domestic inflationary force, the Conference called on various departments and areas nationwide to keep the overall price level stable in line with changes in the price aggregate level and prompt the adjustment of macroeconomic regulation.

By People's Daily Online and its author is Wang Tongsan
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