China set to hold economic policy meeting this weekend: report

Asian Economic News, Dec 13, 2004

BEIJING, Dec. 1 Kyodo

China is set to hold a key economic policy meeting in Beijing this weekend and set next year's growth target at around 8 percent, a Hong Kong-based newspaper closely allied with Beijing reported Wednesday.

The Wen Wei Po quoted unnamed informed sources in the report. The economic conference takes place late in the year to decide on economic policy for the year ahead.

China's state media said on the same day the Political Bureau of the Chinese Communist Party's Central Committee held a meeting Wednesday that usually precedes the key economic conference.

Wednesday's meeting decided that China ''will exercise prudent fiscal and monetary policies in 2005,'' according to Xinhua News Agency.

China's economic growth target has been set around 7 percent since 1999. But the country has continuously achieved higher growth than its targets, and next year's goal will reflect that trend, according to the Wen Wei Po.

In the July-September period, the country's economy slowed moderately but continued to grow at a brisk pace, expanding 9.1 percent compared with the same period in 2003. Growth for the first three quarters of the year stood at 9.5 percent.

The robust growth has continued despite a raft of measures to cool the economy since earlier this year, including hikes in deposit reserve requirements at commercial banks and curbs on unwanted investment projects.

As part of an effort to tame the pace of growth, China has worked to cut back lending for investments in red-hot sectors, which it said was making progress.

The outstanding balance of loans made by China's four state-owned commercial banks to three overheated sectors -- steel, cement and aluminum -- declined by 9.6 billion yuan from the beginning of this year to 296.6 billion yuan at the end of August, according to data released by the China Banking Regulatory Commission on Wednesday.

Analysts are also expected to pay attention to developments at the weekend conference for any signs that China may loosen its grip on the yuan, which is pegged in a tight range of around 8.28 to the dollar.

Countries such as the United States say the arrangement gives China an unfair trade advantage by making Chinese-made exports unfairly cheap.

While speculation has grown over changes to China's exchange rate system, Premier Wen Jiabao said earlier this week that the country will not revalue the yuan while being pressured to do so.

He said that for any changes to take place, China must be assured of a stable macroeconomic environment, and that there must be an appropriate plan to keep the yuan stable.

China will take into consideration the impact of the move on the rest of the world, the premier said, adding that the greater the speculation made about the yuan, the less chance there will be that China will take that step.