China to Fine-Tune Policies in 2013

Xi Jinping
Lintao Zhang
Xi Jinping

China will maintain its fine-tuning of economic policies in 2013 to ensure stable economic growth, state television quoted Chinese Communist Party chief Xi Jinping as saying on Tuesday.

Addressing a politburo meeting, Xi said the government aimed to stabilise exports as the world's second-largest economy faced both favourable factors and challenges next year.

"We will keep continuity and stability of macro-economy policies, prioritising on making policies more targeted and effective while fine-tuning policies when appropriate," state television cited Xi as telling the meeting.

"China will make more efforts on expanding domestic demand and fostering new consumption growth areas."

The government would keep prices basically stable while strengthening property controls, Xi was quoted as saying.

The government would also deepen economic reforms, including allowing market forces to play a bigger role in setting prices of resource products and expanding value-added tax reforms.

Authorities will also push forward reform of state firms.

China's annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.

The economy has been recovering thanks to a raft of pro-growth policies in recent months, but it faces uncertainties next year from the looming "fiscal cliff" in the United States and Europe's debt crisis.

Under the banner of policy "fine-tuning", China's central bank cut interest rates twice in June and July and lowered banks' reserve requirement ratio (RRR) three times since late 2011, freeing an estimated 1.2 trillion yuan ($193 billion) for boosting loans.

But it has refrained from cutting interest rates or RRR since July, opting to inject short-term cash via its open market operations into money markets - a move that analysts say could underscore its concerns over inflation and property risks.