China aims to boost domestic demand, exports

BEIJING: China’s top leaders pledged yesterday to maintain pro-growth economic policies put in place during the global slowdown and continue a push to make domestic demand a new pillar of the economy.

STRONGER GROWTH: Employees working along the assembly line of Anhui Jianghuai Automobile Co. Ltd in Hefei, Anhui province yesterday. China’s economy probably turned the corner in three important areas last month, with consumer prices, exports and imports likely to rise in year-on-year terms for the first time since the global financial crisis struck. — Reuters photo

STRONGER GROWTH: Employees working along the assembly line of Anhui Jianghuai Automobile Co. Ltd in Hefei, Anhui province yesterday. China’s economy probably turned the corner in three important areas last month, with consumer prices, exports and imports likely to rise in year-on-year terms for the first time since the global financial crisis struck. — Reuters photo

The promise came at the end of a key annual economic meeting chaired by President Hu Jintao that sets the policy tone for the coming year, Xinhua news agency said.

Typically, few specific targets or spending measures are announced during the Central Economic Work Conference, and no major changes emerged yesterday.

But a continued stimulative approach will likely be welcomed by markets amid increasing recognition that China has become a key engine of global growth, especially as developed nations struggle to recover.

“We must maintain the continuity and stability of our macro-economic policy and continue to implement a proactive fiscal policy and a moderately loose monetary policy,” Xinhua said in a report quoting key points from the meeting.

Leaders, who also included Premier Wen Jiabao, pledged to promote domestic consumption to lessen the country’s reliance on exports, which plummeted when key markets like the United States tipped into recession.

China last year unveiled a four-trillion-yuan (US$586-billion) stimulus package along with big tax breaks to boost domestic spending as the global slump bit.

“While seeking to expand domestic demand, we must especially lay importance on increasing consumer demand of the people,” Xinhua quoted the meeting saying.

At the same time, the government would seek to revive exports while also boosting imports to promote “balanced international trade,” Xinhua said.

The government would seek to stabilise foreign demand for China’s exports, diversify the export base, and “tap into new markets,” it said.  The meeting warned of existing structural imbalances in China’s economy, the need to bolster a weak rural base and a “serious” unemployment situation.

“2009 will be one of the most difficult years for our nation’s economic development in this century,” the report said.

China would also encourage its companies to “invest overseas and expand their business.”

China’s exports are politically sensitive overseas due to huge trade surpluses with key trading partners such as the United States, amid accusations Beijing keeps the value of its yuan currency low to make its exports cheap.

Xinhua’s report made no mention of foreign exchange policy.

The decision also called for greater efforts to encourage “urbanisation”, which analysts said could lead to policies supporting the real estate sector.

The key Chinese share index in Shanghai closed 0.45 per cent after news of the meeting emerged.

China’s economy grew 8.9 per cent in the third quarter — the fastest pace in a year. The World Bank upgraded its 2009 growth forecast for China last month to 8.4 per cent, citing the public spending but saying more domestic demand was needed to ensure a sustainable recovery. —AFP

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