Growth still heads fight on inflation

PUBLISHED : Thursday, 15 December, 2011, 12:00am
UPDATED : Thursday, 15 December, 2011, 12:00am


Mainland leaders have made the fight against inflation - conspicuously played down at a Politburo meeting last week - an economic policy priority next year at a meeting co-chaired by President Hu Jintao and Premier Wen Jiabao .

However, analysts said the three-day Central Economic Work Conference, which set economic policies for next year, still put economic growth before taming inflation.

The mainland would seek stable and relatively fast economic growth next year amid an 'extremely grim and complicated' global outlook, said a statement released yesterday after the meeting, which brought together central government leaders and regional officials.

''Stability' is the key word for policymaking in 2012, which is the key year for leadership change,' said Ting Lu, chief China economist with Bank of America Merrill Lynch. With rising external risks and inflation that had stabilised, 'this statement is definitely more pro-growth than the one issued a year ago,' Lu said.

'Stability means maintaining basically steady macroeconomic policy, relatively fast economic growth, stable consumer prices and social stability,' the statement said.

Last year's conference made control of surging prices the priority for 2011. But there have been signs of a policy shift as inflation eases and economic growth slows.

Economists from JP Morgan Chase Bank said the conference made 'maintaining stable economic growth the key policy priority for 2012, with economic restructuring and managing inflation expectations being the other key policy targets.'

Leaders vowed to maintain the mainland's year-old 'prudent' monetary policy and a 'proactive' fiscal policy next year, and pledged to resolutely control house prices.

The government's resolve to rein in the property market has seen mainland stock markets slump, with Shanghai's A-share index falling to levels last seen during the depths of the global financial crisis.

Leaders also said they would fine-tune macroeconomic policy and make policy responses more targeted, flexible and forward-looking.

Analysts said sharp slowdowns in inflation and economic growth had given policymakers more scope to loosen monetary policy to support growth amid a bleak global outlook.

The statement said that with the world economy slowing, large risks had arisen. 'We should strengthen our awareness of risks and develop a full understanding of the challenges and opportunities brought by the global financial crisis,' it said.

Credit growth would be kept at a reasonable level next year, it said, adding that management of local government debt would be strengthened and preventing potential economic risks would be a focus.