China makes growth guarantee against grim global economy

BEIJING: China pledged to guarantee growth in the face of an "extremely grim" outlook for the global economy in 2012, rounding off its annual policy-setting conference on Wednesday with a series of commitments to deliver economic stability, Reuters reported.Laying out a blueprint for the worlds second-biggest economy in the year ahead, Beijing promised to keep monetary policy "prudent," fiscal policy "pro-active" and consumer prices stablelanguage broadly in line with previous commitments.Economists said the rhetoric suggested Beijing preferred to only fine-tune economic policies, rather than swing into an outright monetary easing mode to shore up growth, which is expected by many analysts to slip below nine per cent next year for the first time in over a decade.The pronouncements doused some investor hopes for promises of more explicit measures to lift the economy, pushing the Shanghai stock market down 0.9 per cent on Wednesday to close at a 33-month low."It seems the government, at least for now, is not ready to conduct a blanket policy relaxation," said Tang Yunfei, an economist with Founder Securities in Beijing."But it also made clear that the policies will be flexible, which means the government will react when slowdown trends are clear."Indeed, Chinas view on the global economic backdrop flagged the policy challenges that could lie ahead for an economy in which trade plays a central role."Looking into next year, the trend in the global economy on the whole is grim and complicated," said a statement published by the official Xinhua news agency after the annual conference."Uncertainties are rising around a recovery in the world economy."Beijings wish to downplay those risks domestically was apparent in all economic plans outlined, which broadly endorsed a decision by Chinas top leaders last week to avoid big policy changes before a critical leadership succession in 2012.The yuan will be kept "basically stable"; interest rate and exchange rate reforms will continue; measures aimed at calming the property market will be kept; exports will be held steady whilst imports boosted to balance trade."Stability means to maintain basically steady macro-economic policy, relatively fast economic growth, stable consumer prices and social stability," one of several statements carried by the official Xinhua news agency said.Economists say policy fine-tuning is already under way. Data showed Chinese banks made 562 billion yuan of new loans in November, a shade more than forecast as Beijing gently eases tight credit conditions.Bank lending is a focal point in Chinas monetary policy as it is controlled by the government to steer economic growth and control inflation.
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