Tightening policy should stay for now, Wen says
Premier Wen Jiabao says the country should resolutely continue with its tightening measures on the property market for at least the rest of the year.
According to statements posted on the government's official website after a regular State Council meeting that Wen chaired on Saturday, he said local governments should strictly carry out existing policies and let the Chinese people see the effects in the coming months.
The meeting was to discuss economic issues that will be addressed in the winter and spring, the statement said.
Wen said the government should continue to adopt measures to promote the 'reasonable adjustment' of housing prices and increase the amount of land allocated for low- income housing.
He also said measures must be continued to stabilise consumer prices, especially for staple foods.
The mainland's consumer price index (CPI), a main gauge of inflation, eased to 6.1 per cent in September from 6.2 per cent in August and from a 37-month high of 6.5 per cent in July. However, for the first nine months of this year, the CPI rose 5.7 per cent from the same period last year, far outpacing the government's 4 per cent target for the whole year.
To mop up excessive liquidity that helps fuel inflation, the government implemented a monetary tightening policy last year. The central bank has raised the benchmark interest rate three times this year and increased the reserve requirement ratio for commercial banks six times.
But in the meeting, Wen said that the government would make its economic policies more accurate and flexible, while 'fine-tuning' its policy when appropriate, repeating a statement he made on Tuesday.
The comments last week triggered widespread market speculation that the government might somewhat relax its year-old tightening measures, as the Chinese economy is now growing at its slowest pace in two years, in the wake of a faltering global economy and tightening monetary environment. Wen's statement on Tuesday also contributed to soaring share prices of property developers on the mainland and Hong Kong stock exchanges last week.
Economic growth has slowed since late last year. Gross domestic product grew 9.1 per cent year on year in the third quarter, reflecting a steady decline from 9.8 per cent in the fourth quarter of last year.
