China to keep steady policies, deepen reforms in 2013

Reuters News
Posted: Dec 16, 2012 3:52 AM

By Kevin Yao and Sui-Lee Wee

BEIJING (Reuters) - China will maintain steady economic policies in 2013, leaving room for maneuver in the face of global risks while deepening reforms to support long-term growth, the official Xinhua news agency said after an annual policy-setting conference on Sunday.

Chinese leaders have already pledged to ensure stable economic growth next year, and the latest announcement follows a December 7 Reuters report in which sources said that China's leaders were likely to stick with a growth target of 7.5 percent next year, the same as in 2012.

Experts say new Communist Party chief Xi Jinping needs to take bold steps in enacting economic reforms that could include restructuring how China achieves its growth by emphasizing consumption over investment and exports, and loosening the dominance of state companies.

China will ensure appropriate growth in bank loans and social financing in 2013 and will keep the yuan currency stable to cushion economy against global headwinds, Xinhua said after the close of the annual Central Economic Work Conference, which Xi presided over.

"China will continue to implement the pro-active fiscal policy and prudent monetary policy in 2013," Xinhua said.

"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 economy still faces global uncertainties along with rising trade protectionism, while the risk of rising inflation and asset bubbles globally is increasing, it said.

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 steady since October thanks to a raft of pro-growth policies.


The central bank, the People's Bank of China, has kept the same 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 pro-active, or expansionary, since late 2008, when the government unveiled a 4 trillion yuan ($641 billion) stimulus package after the economy took a big hit during the global financial crisis.

The country will push forward the next stage of economic reforms "with greater political courage and wisdom", Xinhua said.

Xi 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.

The government will maintain property controls, including restrictions on how many homes individuals can buy, which have been in place since 2009, to ward off potential risks, and will make greater efforts to improve the quality of urbanization to help bolster domestic demand.

China will stabilize its exports while boosting imports to gradually balance the country's international payments and expanding its outbound investment next year, Xinhua added.

The closed-door, two-day meeting in Beijing brought together the top leadership, provincial officials, ministers, regulators and the central bank chief as well as the heads of the top state firms and banks.

(Editing by Jonathan Standing and Robert Birsel)