China’s leaders wrapped up an annual economic planning meeting yesterday with a pledge to keep growth on track while stepping up moves to combat inflation and other potential destabilizing problems.
The vow to keep the economy on an even keel came a day after the government reported that inflation surged to a 28-month high last month, despite efforts to counter speculation and increase food supplies.
A brief statement by Xinhua news agency announcing the end of the three-day meeting of the powerful nine-member Chinese Communist Party Politburo Standing Committee — presided over by Chinese President Hu Jintao (胡錦濤) — gave no details. It said the government would keep its policy flexible, proactive and prudent while trying to maintain a balance between fast growth and stability.
Inflation surged to 5.1 percent last month, way above the government’s original target of 3 percent. It was mainly driven by an 11.7 percent year-on-year jump in food and utility prices.
The higher-than-anticipated rate raised expectations that China’s central bank will go ahead with another interest rate hike, acting to slow growth at a time when the US and Japan are still focusing on stimulus for their own lagging economies.
Beijing has sought to reassure the public that it has inflation under control, cracking down on speculation in commodities and ordering refineries to quickly raise production to counter diesel shortages.
On Friday, China ordered banks to increase their reserves by 0.5 percent of deposits to help curb surging lending, the third reserve increase in five weeks.
Chinese banks lent a total of 564 billion yuan (US$82 billion) in October. That would push total lending so far this year to 7.45 trillion yuan, suggesting it will overshoot Beijing’s official lending target for this year of 7.5 trillion yuan.
China raised interest rates on Oct. 19 for the first time since the crisis, highlighting the divergence of its robust expansion from the US, Europe and Japan, which are still trying to shore up growth.
The Politburo announced on Dec. 3 that it was ordering a “prudent monetary policy” next year, a change from the “relatively easy” credit policy in place throughout the crisis.