With 2007 just around the corner, observers looking out for changes to economic policies in the world's fourth-largest economy should focus on two events in Beijing next month. Mainland leaders are expected to convene the annual economic conference early next month to set out the agenda for next year. This will be followed by the opening round of talks under the 'strategic economic dialogue' between top mainland officials and a high-powered delegation from Washington, including US Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke. During the dialogue, scheduled for the middle of the month, US officials are expected to pile more pressure on the mainland leadership to open up China's economy and revalue the yuan more quickly and sharply. Over the weekend, the official media and government economists came out in force to expound on the current state and future direction of the economy, with a sense of relief and optimism. Judging from their remarks - which were apparently aimed at setting the tone for next month's conference - and my own interviews with mainland officials, here are some broad hints of the economic policies to be discussed and approved at the conference. Any significant changes in China's economic policies are unlikely next year as Beijing is expected to continue its prudent fiscal and monetary policies and apply its macroeconomic control measures with tight reins over bank lending and land supply. While the mainland's economy may expand as much as 10.7 per cent this year, helped by soaring investment and bank lending, it is widely expected to slow down to single-digit growth, but the easing is unlikely to be sharp. Government economists now expect the economy to grow by a little more than 9 per cent next year. Both China Central Television and Xinhua yesterday carried optimistic reports. Li Xiaochao , spokesman for the National Bureau of Statistics, told Xinhua China's macro economy remained sound and stable, with the trend for overheating growth having been reined in. In October, urban fixed-asset investment slowed to 16.8 per cent year on year, down from 23.6 per cent the previous month, while industrial production increased 14.7 per cent, slower than September's rate of 16.1 per cent. With economic growth robust and inflation being held below 2 per cent, senior leaders are now more confident that they can steer the economy away from the boom-and-bust cycles that have afflicted the economy for many years. They believe growth should be manageable as long as it stays in the range of between 8 and 10 per cent. One can bet the yuan will gain further in the days ahead of Mr Paulson's visit. Last week, the yuan was up 0.25 per cent to 7.8525 against the dollar, the biggest weekly gain in two months. While the Paulson factor did play a role, the yuan's strengthening also had a lot to do with the weakening of the dollar. Mainland officials say Beijing will continue its gradual approach to revaluing the yuan despite the rising protests from Washington and Brussels for quicker action. But senior leaders are expected to appease the Americans by promising to boost consumer spending and increase welfare spending, to get mainlanders to spend more and make the economy less dependent on investment and exports. They may introduce incentives such as boosting the salaries of civil servants and raising minimum wages, and forcing state companies to pay dividends to the government so that it can spend more on health care, education, and social security. But as People's Bank of China deputy governor Su Ning pointed out last week, high savings and low consumption are two challenges that cannot be easily solved in the short term.