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People's Daily Online>>China Business

Economic roadmap eyes stability

(Global Times)

13:15, December 15, 2011

China's economic objective in 2012 will be to seek relatively fast growth while maintaining stable consumer prices, said a government statement issued yesterday, wrapping up the three-day central economic work conference.

"The theme of next year's economic and social development is to make progress while maintaining stability, which means to maintain basically steady macro-economic policy, relatively fast economic growth, stable consumer prices and social stability," the statement said.

The country will preset or fine-tune monetary policy according to changes in economic development, harness multiple monetary policy tools and maintain a "reasonable increase" in money and credit supply.

It will deepen interest and exchange rate formation mechanism reforms, with the exchange rate of the yuan to be kept "basically stable."

Late last month, the People's Bank of China announced the first cut in the deposit-reserve ratio for commercial banks in three years, after 12 consecutive raises of the ratio to curb inflation.

Growth of the consumer price index (CPI), a main gauge of inflation, eased to 4.2 percent in November from a July peak of 6.5 percent.

However, the CPI from January to November still showed a 5.5 percent growth year-on-year, well above the government's full-year inflation control target of 4 percent.

Meanwhile, the country's economic growth slowed to 9.1 percent in the third quarter from 9.7 and 9.5 percent respectively in the first two quarters.

The purchasing managers index, a gauge to measure manufacturing activity, also contracted in November for the first time in 33 months, fuelling concerns the economy is facing a hard landing.

In an e-mail to the Global Times, Lu Ting, a Hong Kong-based economist with Bank of America, said maintaining growth was still the top priority for next year, despite no explicit confirmation in the statement.

"Stability is the key word for policymaking in 2012. With rising external risks and an already stabilized inflation, this memo is definitely more pro-growth," Lu wrote.

Compared with 2011, fiscal policy in 2012 will be more proactive by stepping up spending on social welfare and proceeding with tax cuts while monetary policies will be eased on the margin, Lu said, adding that "structural reforms may take a back seat."

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