Chinese leaders wrapped up an annual strategy meeting yesterday vowing to keep economic stimulus and easy credit policies in place to support a stable recovery, while improving the quality of the country’s often chaotic economic growth.
The meeting in Beijing, presided over by Chinese President Hu Jintao (胡錦濤) and Premier Wen Jiabao (溫家寶), ended as expected with calls to ensure the recovery from the global crisis remains stable, Xinhua news agency said in dispatches posted on the government’s main Web site.
Officials attending the three-day Central Economic Work Conference agreed that the global slowdown had added to the urgency for China to adjust its model of economic growth, which many economists say is excessively dominated by state-led industries, rather than more sustainable, consumer-led demand.
China’s economy is forecast to grow 8.3 percent this year, after dipping to a low of 6.1 percent in the first quarter and since recovering to 8.9 percent in July-September.
Like other major economies, China is wary of pulling back from stimulus policies put in place late last year, given the weakness of key export markets in the US and Europe, where unemployment has continued to rise despite signs the worst of the crisis may be past.
To counter the slump in exports, Beijing announced a 4 trillion yuan (US$586 billion) stimulus package and urged state-controlled banks to lend lavishly to support a slew of public works projects.
Now, the emphasis is shifting to promoting consumer spending and private investment — drivers of domestic demand that are seen as crucial for future growth.
While consumer demand has remained resilient despite the slowdown earlier in the year, it still accounts for less than half of China’s economic activity — well below the levels in many other major economies.
Meanwhile, the government is struggling to control the expansion of industries viewed as already overheated, such as steelmaking and cement.
The rapid credit expansion has added to risks in China’s banking sector, the Basel, Switzerland-based Bank for International Settlements warned in a quarterly report issued Sunday.
Aside from the easing of standards to allow banks to issue some 8.95 trillion yuan in new loans in January-October, up from a total of 4.2 trillion yuan the year before, future tightening of monetary policies might leave some projects short of funds before they are completed, leading to a buildup of bad loans, it said.
Meanwhile, inflows of outside capital into the world’s fastest-growing major economy are adding to inflationary pressures, especially in real estate and stock markets, the BIS report said.
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