Think tank says investments to remain stable
This policy is the most effective and direct way to prevent further slowing, says academic
Government researchers are confident Beijing will keep investments stable next year, predicting economic growth will accelerate to 8.2 per cent from an estimated 7.7 per cent this year.
Assuming the European debt crisis doesn't worsen and the US is able to avert the "fiscal cliff" problem, Beijing is likely to maintain policy stability next year, according to a "blue book" released by the Chinese Academy of Social Sciences yesterday.
"We are cautiously optimistic about the prospects for 2013," said Li Xuesong, a researcher at the think tank.
While the government should boost consumption further, Li said stabilising investments should be the "most effective and most direct step" to prevent a further slowdown.
The government has refrained from launching massive stimulus programmes to spur growth this year after the last round of stimulus fuelled inflation. But it has been fast-tracking infrastructure projects since May as economic growth slowed to its lowest since 2009.
Li called on the authorities to "maintain sufficient vigilance" on the downside risks in domestic and global economy, keep policy flexible and reserve enough policy tools to cope with challenges as they emerge.
The think tank expects fixed-asset investments will grow 20.4 per cent this year and 19.9 per cent next year. Last year the investments grew 23.8 per cent.
Zhang Hanya, head of the Investment Association of China, an institute under the National Development and Reform Commission, was confident the leaders would step up investments.
Zhang, who participated in drafting the blue book, said based on experience, "each time a new government takes power, it pays a lot of attention to the economic performance in its first year".
Zhang also said China would next year enter a peak period of project launches under the 12th five-year plan for 2011-2015.
Beijing should increase fiscal deficit and guide private funds to support major transport and urban infrastructure investments, the blue book says.
It also suggests the government step up tax cuts, including cuts to value-added taxes.
The think tank has been publishing the "blue book" for 22 years.