Economy

Economic planners meet to fine tune policies

(Agencies)
Updated: 2009-12-07 14:47

SHANGHAI: China's top economic planners were meeting Monday in an annual session said to be focused on fine-tuning policies to ensure the recovery is sustained.

The gathering in Beijing, headed by President Hu Jintao, began Saturday and was expected to wrap up later Monday with a pledge to keep in place stimulus policies aimed at preventing a relapse of the downturn, with adjustments to reflect mounting worries over excess investment in some industries, media reported.

A year after the country launched a 4 trillion yuan ($586 billion) stimulus package aimed at countering the impact of slumping exports, economists say they expect growth for the year to exceed the government's target of 8 percent.

This year's meeting also was expected to include preliminary work on the country's next five-year plan, for the years 2011-2015.

Late last month, the country's policy makers indicated they planned to stick to stimulus spending and easy credit to ensure growth is sustained despite weakness in the US and other key export markets.

The emphasis, however, is shifting to promoting consumer spending and private investment, rather than the state-led investment of this year's recovery program, which has focused heavily on construction of railways, roads and other public works, newspaper China Business News and other reports said.

China's economy grew 8.9 percent over a year earlier in the third quarter of this year, after dipping to a 12-year low of 6.1 percent in the first quarter, a stunning rebound from last year's slowdown. But the government has struggled to control the expansion of industries viewed as already overheated, such as steelmaking and cement.

The rapid credit expansion has added to risks in China's banking sector, the Basel, Switzerland-based Bank for International Settlements warned in a quarterly report issued Sunday.

Apart from the easing of standards to allow banks to issue some 8.95 trillion yuan ($1.3 trillion) in new loans in January-October, up from a total of 4.2 trillion yuan the year before, future tightening of monetary policies might leave some projects short of funds before they are completed, leading to a buildup of bad loans, it said.

Meanwhile, inflows of outside capital into the world's fastest growing major economy are adding to inflationary pressures, especially in real estate and stock markets, the BIS report warned.