Chinese Premier Wen Jiabao (溫家寶) said the government’s mix of active fiscal policies and relaxed monetary settings must stay in place while economic growth faces domestic and external weaknesses, official media said yesterday.
Visiting eastern Jiangsu Province over recent days, Wen stressed the government’s continued commitment to these policies, indicating that no shift is looming.
“We are persisting with implementing active fiscal policies and appropriately relaxed monetary policies because we still face many hardships and challenges, the international economic outlook remains unclear and pressure from falling external demand remains heavy,” Wen said, according to the central government’s Web site. “The impetus for self-sustaining growth in the economy is still not strong ... Therefore, the direction of macro-economic policy cannot change.”
Chinese officials face domestic and foreign investors jittery over the direction of policy and Wen’s words add to a recent drumbeat of comments stressing that the policy recipe remains unchanged.
Senior Chinese economic officials on Friday also quashed market speculation that Beijing might be starting to unwind its loose monetary policies introduced to prop up growth in the world’s third-largest economy,
The Shanghai stock market fell 4.4 percent this week, its biggest loss in five months, as investors fretted that the central bank was being less generous in flooding the banking system with cash to support spending and investment.
Figures for last month out this week are likely to show that China’s recovery is on course. GDP grew 7.9 percent in the second quarter from a year earlier.
But the Chinese Communist Party, which celebrates its 60th anniversary in power on Oct. 1, is leaving nothing to chance as long as the global economy remains in the doldrums, depriving China of the export demand that has been a big driver of growth in the past few years.
“Some industries and businesses are still in some hardship and the problem of excess production capacity is extremely striking,” Wen said.