China’s top leaders opened a three-day meeting yesterday to set out the country’s economic priorities for next year as turmoil in Europe and the US dampened growth in the world’s second--largest economy.
The closed-door Central Economic Work Meeting is the last major economic policy gathering before China’s senior leaders step down from their party posts in a once-in-a-decade transition of power that begins next year.
The Chinese Communist Party said ahead of the meeting that China would implement a “prudent” monetary policy next year, signaling authorities will move cautiously as they ease credit restrictions to prevent a sharp slowdown.
The outcome of the meeting, which is being held at a secret location in Beijing and presided over by Chinese President Hu Jintao (胡錦濤), is likely to be announced tomorrow. Chinese Premier Wen Jiabao (溫家寶), in charge of the Asian giant’s economy, will also attend.
China has seen demand for its products shrink in recent months as overseas consumers cut back on spending because of an increasingly bleak economic outlook.
Growth in exports slowed last month, while consumer prices rose at their weakest pace in more than a year and industrial output growth hit its lowest level in more than two years, according to official data released last week.
Manufacturing activity contracted last month for the first time in 33 months, fueling concerns the economy was at risk of a hard landing.
However, IHS Global Insight analyst Ren Xianfang (任現芳) said Chinese leaders had made it clear that there was “no aggressive -easing in the pipeline.”
“This means that we could see modest acceleration in money supply and new credit, but the likelihood for interest rate cuts is pretty small,” Ren said.
Until recently, policymakers have been reluctant to relax tight credit restrictions implemented in the past two years amid fear of reigniting inflation, which peaked at a more than three-year high of 6.5 percent in July. However, late last month, Beijing cut the amount of money banks must hold in reserve for the first time in three years to spur lending and counter turmoil in Europe and the US.
Chinese media said yesterday policymakers at the meeting must be prepared to deal with a “weakening domestic economy and volatile external environment.”