Wen Jiabao

Beijing vows to ensure strong growth rate

PUBLISHED : Thursday, 11 December, 2008, 12:00am
UPDATED : Thursday, 11 December, 2008, 12:00am

Top mainland leaders yesterday pledged an all-out effort to ensure strong growth next year after exports plunged, domestic demand shrank and the inflow of foreign investment dropped sharply last month.

In a statement after the close of the central economic work conference, chaired by President Hu Jintao and Premier Wen Jiabao , policymakers said boosting domestic consumption to maintain stable and relatively fast growth was the top priority next year, with the global downturn likely to worsen.

'The difficulties in the Chinese economy are growing and the downward pressure on economic growth is increasing,' the statement said.

Just hours earlier, Beijing released economic data for last month that pointed to a further deterioration in the world's fourth largest economy.

Mainland exports tumbled for the first time in seven years, producer inflation slowed to a more than two-year low and incoming foreign direct investment dropped sharply. 'With the need to create jobs to maintain social stability, we will stick with a 'proactive' fiscal policy and a 'moderately loose' monetary policy next year' said a statement broadcast on state television.The government would increase spending by a 'relatively big margin' and cut taxes next year to increase support for job creation, agriculture, social security, education, energy conservation and small and medium-sized enterprises.

But the statement did not contain detailed new measures expected by investors. Anticipation of more measures from the meeting prompted stock markets on the mainland and in Hong Kong to jump strongly yesterday. The Hang Seng Index finished up more than 5 per cent, while the Shanghai and Shenzhen markets ended up more than 2 per cent.

In a sign that Beijing is unlikely to allow the yuan to depreciate to boost exports, the statement said the leadership reaffirmed it would continue to maintain the exchange rate at a reasonable and balanced level.