National People's Congress

Beijing may 'fine-tune' economic policy

PUBLISHED : Monday, 13 February, 2012, 12:00am
UPDATED : Monday, 13 February, 2012, 12:00am


Premier Wen Jiabao yesterday said that the central government may 'fine-tune' economic policy in the first quarter of this year, and that Beijing was closely monitoring the global economic situation in case 'a proactive' response was needed.

It was the first recent signal from Wen that the government might review its macroeconomic policies in light of the global uncertainty caused by the euro-zone sovereign debt crisis and economic slowdown in the United States.

Soliciting views last week from industry representatives for his draft of the government work report to be delivered during next month's annual congress meeting, Wen said the central government should 'make a proper judgment on the macroeconomic situation as early as possible' and take 'quick action'.

'The central government is keeping a close eye on the economic situation in January, and the first quarter of this year will be crucial,' Wen told official media last night. 'We have to make a proper judgment as early as possible when things happen and take quick action.'

Wen's remarks come amid growing expectations that the government will ease monetary policy in the next two months, and underlined the central government's recent effort to help tens of millions of small and medium-sized enterprises stay afloat.

Economists with HSBC, Nomura, and Daiwa Capital Markets have predicted that the People's Bank of China will cut the reserve requirement ratio, the amount banks are required to set aside when lending, as soon as in the next few weeks.

Wen said last week during a State Council conference that the central government would aim at improving housing affordability and lifting people's income while keeping close control of the property sector.

He said private investors should be allowed greater access to sectors such as banking and finance, energy, transport and social services, potentially breaking up industrial monopolies.

The National Bureau of Statistics last week revealed an unexpected 4.5 per cent spike in last month's inflation, significantly higher than economists' forecast of a 4 per cent rise, which limits the scope for monetary loosening.

Also, the People's Bank of China's disclosure last week of lower-than-expected new loans of 738.1 billion yuan (HK$915 billion) last month showed that the central bank remained cautious about maintaining control of liquidity.

Trade figures for last month were also surprisingly weak, with imports down 15.3 per cent, the lowest since August 2009, and exports declining 0.5 per cent year on year.

Meanwhile, Commerce Minister Chen Deming said yesterday that the ministry would maintain a 'stable' export policy this year to support trade.

International and domestic analysts have revised China's growth forecast recently, with the International Monetary Fund warning a decline in Europe could cut China's growth rate almost in half this year.