Chinese Premier Wen Jiabao (溫家寶) said Beijing would “fine-tune” its economic policy this year, state media reported, raising hopes of monetary loosening as the world’s second-largest economy slows.
China’s economy expanded by an annual 9.2 percent last year, narrowing from 10.4 percent in 2010, and is widely expected to slow further this year, raising the specter of more social unrest as the contraction takes hold.
“It’s worth paying close attention to the economic situation in January and the first quarter,” Xinhua news agency quoted Wen on late Sunday as telling a government meeting.
He added the government would “pre-emptively adjust and fine-tune starting from the first quarter,” but gave no further details.
Analysts widely expect Beijing to further trim the amount of money that banks must keep in reserve, following a cut in December last year, to counter slower economic growth due to global turmoil.
“The most basic requirement is to maintain the continuity and flexibility of policy,” Wen said.
The country’s trade activity fell last month from a year earlier, as the domestic slowdown and weaker overseas sales hit demand, though factory closures from a long holiday also played a role.
Exports fell 0.5 percent year-on-year last month to US$149.94 billion, while imports plunged 15.3 percent to US$122.66 billion, the government said, marking the worst performance since during the global financial crisis in 2009.
The slowdown has resulted in large-scale strikes in recent months, as workers resentful about low salaries or layoffs face off with employers juggling high costs and exports hit by lower demand from the debt-burdened West.
So far the policy fine-tuning has focused more on cutting taxes and red tape for the small businesses that provide about 75 percent of the jobs in China. Wen ruled out loosening the government’s grip over the property sector, citing the need for “reasonable” housing prices.
China has introduced a range of measures aimed at curbing the real-estate market over the last year, such as bans on buying second homes, hiking minimum downpayments and introducing property taxes in select cities.
“For the purpose of promoting fairness and stability, the government’s controls cannot be relaxed,” he said.
One small city, Wuhu in the eastern province of Anhui, said last week it would offer subsidies for apartment purchases in a sign of easing, but it retreated from the policy over the weekend, state media reported.