China: Steady as she goes

China-economy

Hold on to your hats! A prudent monetary policy is, apparently, on the agenda for China in 2013. This courtesy of newly-elected leader Xi Jinping, at a recent two-day conference in the country.

According to state-run Xinhua, by way of AP, by way of the Montreal Gazette, the country is in a slump and planning to move ahead cautiously. Riveting.

“A statement quoted by the official Xinhua News Agency after an annual planning conference pledged more market-opening reforms in 2013.

The world’s second-largest economy is gradually pulling out of its deepest slump since the 2008 global crisis, but weaker-than-expected November trade data prompted suggestions the rebound might be faltering.

The leadership under party General Secretary Xi Jinping pledged a “proactive fiscal policy” and “prudent monetary policy,” Xinhua said, referring to willingness to boost spending if needed and keep credit easy so long as inflation stays low.

The conference is the first opportunity for the new leaders to announce their own plans for China’s economic course. Most analysts expect them to stick largely to the goals of the party’s current five-year development plan, which runs through 2015.”

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In the past three months, economic growth fell to a three-and-a-half-year low of 7.4 per cent in, although factory output, consumer spending and other indicators are improving in the current quarter. Still the recovery will be slow and steady, much to the dismay of the world economy–something this slow and steady will likely not cause anything in Europe or the US to rebound.

The New York Times had more information on the conference, and the details of Xi’s plan:

“The statement endorsed tax cuts, continued curbs on real estate speculation and a broader effort to increase domestic consumption and wean the economy from its dependence on exports and investment.

‘The opportunities facing us are no longer the traditional ones of simply entering the international division of labor, expanding exports and accelerating investments, but rather new opportunities forcing us to expand domestic demand, improve innovative capacities and promoting the transformation of the mode of development,’ the statement said.

Held in December each year, the Central Economic Work Conference in theory is jointly run by the Central Committee of the Communist Party and by the government’s cabinet of ministers. In reality, the Standing Committee of the Politburo has the power, and all seven of its members attended the conference, together with Prime Minister Wen Jiabao, who left the standing committee last month but remains in office as prime minister until the National People’s Congress next March.

While China has many economic opportunities, ‘we must soberly recognize that there are still many risks and challenges confronting our national development,’ the overview released by Xinhua said. “Problems with imbalances, ill-coordination and lack of sustainability remain pronounced.'”

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