China's leaders wrapped up an annual economic
planning meeting Sunday with a pledge to cool surging inflation
while shifting the economy toward more stable, balanced growth.
The vow to keep the economy on an even keel came a day after the
government reported that inflation jumped to a 28-month high in
November, despite a crackdown on speculation and repeated moves to
curb the flood of money circulating in the economy from massive
stimulus spending and bank lending.
A statement announcing the end of the conference, held each year
in early December, reiterated previous pledges to support farmers,
fight poverty, promote clean energy and various other sweeping
goals. But the broad policy blueprint included no specific new
policy measures.
In the coming year, which is due to begin a transition to a new
generation of leaders, economic policies will be flexible, proactive
and prudent, said the statement, carried by the official Xinhua News
Agency.
The aim is to maintain a balance between fast growth and
stability.
"China is facing a complicated situation. Improving people's
living standards and keeping social stability are still arduous
tasks," said the statement, which was read on the evening state-run
television news broadcast.
With their pledge of "greater policy emphasis" on price
stability, the leaders endorsed continued tightening of monetary
policy as a strategy for reining in excess bank lending, Jun Ma, an
economist with Deutsche Bank, said in a report issued after the
meeting ended.
"Overall, we think the work conference has reinforced the
message that anti-inflation measures will be the main policy focus
in the near term," it said.
The meeting also warned against "blindly launching new
projects" as the country begins the new decade - and a new
"five-year plan" for 2011-2015.
Chinese banks lent a total of 7.45 trillion yuan ($1.1 trillion)
in January-November and are certain to overshoot the government's
official lending target of 7.5 trillion yuan.
While the frenzy of lending over the past two years helped China
rebound quickly from the global crisis, combined with bad weather
and rising global commodity prices it has complicated efforts to
cool inflation, which surged to 5.1 percent in November.
That was way above the government's original target of 3 percent
and "beyond people's expectations," Sheng Laiyun, spokesman for
the National Bureau of Statistics, said in announcing the data.
The increase, mainly blamed on higher costs for food and
utilities, has raised expectations that China's central bank will go
ahead with another interest rate hike, acting to slow growth at a
time when the U.S. and Japan are still focusing on stimulus for
their own lagging economies.
Mindful of the political turmoil linked to past bouts of
inflation, Beijing has sought to reassure the public it has prices
under control.
On Friday, China ordered banks to increase their reserves by 0.5
percent of deposits to help curb surging lending, the third reserve
increase in five weeks.
China raised interest rates Oct. 19 for the first time since the
crisis, highlighting the divergence of its robust expansion from the
United States, Europe and Japan, which still are trying to shore up
growth.
Such moves might not have much real impact given the sill
extremely low cost of lending for the country's state-owned banks,
but they play a crucial symbolic role, says CLSA analyst Andy
Rothman.
"It's a political signal they're on top of it," he said.
The ruling Communist Party's top body, the Politburo, had already
set the tone for the work conferenc, announcing Dec. 3 that it was
ordering a "prudent monetary policy" next year, a change from the
"relatively easy" credit policy in place throughout the crisis.
China's rapid economic growth eased to 9.6 percent in the three
months ending in September from a post-crisis high of 11.9 percent
in the firt quarter. It is expected to fall further in coming
months but to stay strong.
In the longer term, the conference endorsed earlier pledges to
boost imports and increase consumer spending - reforms needed to
shift away from China's earlier reliance on export-led growth.
The statement also reiterated Beijing's earlier promises to carry
on with reforms of its tightly controlled currency regime - a
longtime source of friction with the U.S. and other trading partners
that ntend the Chinese yuan is undervalued against other major
currencies, giving its manufacturers a price advantage in other
markets.
Offering no hint of a change in policy direction, it just s
