China will keep macroeconomic policies stable, making adjustments as needed to deal with difficulties, the Communist Party’s Politburo said in its first assessment of the economy under new leader Xi Jinping.
While the economy is stabilizing, it will “face various challenges that should not be underestimated” next year, the official Xinhua News Agency said yesterday, citing a statement issued after a meeting of the ruling party’s top leaders headed by Xi. China will make policies “more targeted and effective, and predetermine or fine-tune these policies at an appropriate time and in an appropriate way,” according to the statement.
The comments are consistent with policies preceding the leadership handover that began last month and signal that Xi, who will probably succeed Hu Jintao as president in March, may avoid boosting stimulus while standing ready to do so should a nascent rebound in economic growth falter.
“There’s an air of confidence about this statement which suggests the new leadership believes the recovery is real,” said Mark Williams, a London-based economist at Capital Economics Ltd. and a former China adviser to the U.K. Treasury. Still, “the key questions about the leadership’s appetite for reform are still unanswered.”
China will expand domestic demand, actively promote urbanization, strengthen real-estate controls and support small business, Xinhua said. The government will also encourage consolidation in industries with overcapacity, it said. Leaders will make efforts to keep investment growth steady, Xinhua said.
The world’s second largest economy will probably maintain its official annual growth target of 7.5 percent next year, according to nine of 16 analysts surveyed by Bloomberg News last month. An unchanged goal would signal that Xi and Li Keqiang, set to succeed Wen Jiabao as premier, are prepared to expand fiscal and monetary easing should the recovery falter.
The nation’s economic growth may be rebounding from a three-year low, with the government’s Purchasing Managers’ Index rising to a seven-month high in November, according to data released Dec. 1.
The Politburo also said yesterday that officials should reduce their meetings and expenses as part of efforts to cut waste, Xinhua reported. Leaders will try to tie traffic up less and will ban “worthless news-reporting,” including reports on senior civil servants’ work and activities, Xinhua said.
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