Economic work meeting to map out key policies

PUBLISHED : Tuesday, 09 December, 2008, 12:00am
UPDATED : Tuesday, 09 December, 2008, 12:00am

The mainland's party elite gathered in Beijing yesterday for a three-day annual national economic work conference to map out key policies for next year as the country struggles to navigate through a downturn worsened by the global financial crisis.

'Keeping an acceptable economic growth rate for next year will top the agenda of the party, and in extreme cases, China will make much bolder moves than announced to avoid any sharp slowdown,' said Zhu Min, an economist with the State Information Centre, a government think-tank.

On the agenda were issues ranging from how to carry out 'active fiscal and moderately loose monetary policies' to easing the difficulties facing small and medium-sized enterprises, to the transformation of economic growth, Xinhua said.

No specific measures have leaked out yet, but the stock markets on the mainland and in Hong Kong apparently pinned high hopes on the meeting.

The benchmark Shanghai Composite Index jumped 3.59 per cent or 72.117 points to close at 2,090.773. The Shenzhen Composite Index advanced 3.69 per cent or 22.184 points to 622.897.

Hong Kong's Hang Seng Index finished up 1,198.78 points or 8.66 per cent at 15,044.87, a seven-week high.

Talk of further measures to support the property sector, banks and the markets, as well as boosting private consumption in the world's fastest-growing key economy, spurred the rally, analysts said.

Despite a quick denial by Commerce Minister Chen Deming that Beijing would not seek to boost exports through depreciating the yuan, market observers still believe a readjustment of foreign exchange rates will be a key topic given the country's rapidly shrinking exports.

Exports, which are second only to investment as the nation's economic driver, usually contribute 1 to 2 percentage points to gross domestic product growth.

However, analysts warn the contribution could dwindle to zero this year or even drag down the overall economy next year.

Last month, Beijing unveiled a 4 trillion yuan (HK$4.5 trillion) economic stimulus package related to infrastructure, environmental protection, business technology upgrades and welfare by 2010.

The State Council also announced on November 28 a nine-point scheme aimed at injecting more liquidity into the economy by adjusting commercial banks' required reserve ratios, interest rates and foreign exchange rates.

Leaders were also expected to discuss a proposal by the finance ministry to let next year's fiscal deficit swell to 280 billion yuan, up 56 per cent from this year, to help maintain growth, China Business reported.

At the end of last year, the nation set its prime macroeconomic policies as 'preventing overheating and an inflationary trend'.

But by July, Beijing toned down its policy to 'maintaining a steady and relatively fast growth plus controlling overly rapid price increases'. And on November 9, when growth was slowing rapidly, the State Council further eased to 'active fiscal and moderately loose monetary policies'.

On the agenda

Issues on maintaining economic growth will dominate the meeting

The finance ministry is proposing to let the fiscal deficit swell to, in yuan: yuan: 280b