Chinese Officials Urge Domestic Demand Boost

China should focus on boosting domestic demand as it responds to the global credit crisis, senior officials said in remarks published on Monday.

Liu Tienan, vice director of the National Development and Reform Commission, the country's top planning body, told a conference over the weekend that the next set of macroeconomic policy steps should aim to expand domestic demand, using consumption to stimulate economic growth.

Liu's comments were reported by the official China Securities Journal, which quoted central bank vice governor Su Ning as saying China, while actively maintaining stable export growth, should focus on efforts to expand domestic demand.

Ma Jiantang, the chief of the National Bureau of Statistics, also put the emphasis on domestic demand.

Writing on the front page of the People's Daily, the mouthpiece of China's Communist Party, Ma said China could tap huge investment potential in transport and housing as well as pent-up rural demand for consumer durables to drive its expansion.

"The basic fundamentals for China's economic growth have not changed. We must keep our confidence," Ma wrote.

He said China could be confident because inflation was falling fast, employment was better than expected and the government had vast foreign exchange reserves.

The government had greatly improved its efficiency in addressing economic problems, said Ma, who was appointed to his job in September.

He said China should take advantage of the global financial crisis to speed up its economic restructuring. Some exporters in the coastal regions were already doing so, he added.

The China Securities Journal quoted Commerce Vice Minister Fu Ziying as saying the government should seek to improve its trade policies as global turmoil and rising protectionism would make it difficult to maintain steady growth in trade next year.

Su, the central banker, said the People's Bank of China would implement a flexible but cautious monetary policy. The PBOC has lowered interest rates three times since mid-September to prop up growth, and economists expect more cuts.

But Wu Xiaoling, a former PBOC deputy governor and now an influential lawmaker, cautioned against excessive reliance on monetary policy to address China's economic problems, the official Shanghai Securities News reported.

Sufficient monetary policy signals had already been sent out, and greater use should be made of fiscal policy, Wu said.

"I would stress that China's monetary policy ought to be stable," she was quoted as saying.

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Wu, currently a vice head of the Chinese parliament's financial committee, said China had no leeway to further cut banks' reserve requirement ratios if it continued to see a rapid build-up of foreign currency reserves.

The PBOC has cut reserve requirements twice for small banks and once for big lenders since mid-September. But it kept them unchanged when it lowered interest rates last week, with officials saying later that the banking system had ample liquidity.

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