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Economic conference wraps up with pledges to stimulate economy

By Xin Zhiming (chinadaily.com.cn)
Updated: 2008-12-10 22:44

China's top leadership wrapped up the three-day Central Economic Work Conference Wednesday, pledging to take a slew of measures to ensure "stable and relatively fast" economic growth next year.

The meeting also decided that the country should try to achieve a "stable and healthy" development of the capital market and real estate sector as its major stock indices have slumped by more than two thirds since late last year and real estate sales dropped dramatically, sources said.

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The Shanghai Composite Index in China's domestic A-share market gained 2 percent Wednesday after shedding more than 1 percent in morning trading. Investors may have expected the conference to reach a consensus on supporting the capital and real estate markets, said Sun Lijian, economist with the Fudan University.

Policymakers at the conference vowed to stimulate domestic demand to maintain a sound economic growth amid the spreading global financial crisis, which has made the World Bank Wednesday forecast a 0.9 percent annual growth – down from 1 percent in its November forecast – for the world economy next year, with the global trade volume to contract by 2.1 percent.

Amid the gloomy global economic prospects, the conference said China will put job creation and people's livelihood on top of the agenda. It will increase input into rural development, education, services, health, social security, job creation, environmental protection and technological innovation, according to a China Central Television (CCTV) report.

While keeping its expansionary fiscal policy and relaxed monetary policy, as it previously pledged, China will apply a "flexible and careful" macroeconomic regulation to ensure the economy fares well next year, according to the CCTV report.

"The only thing we have to fear is fear itself," Premier Wen Jiabao told the meeting Wednesday, citing former US president Franklin D. Roosevelt. "China is a country that is able to overcome difficulties," Wen said.

Analysts have widely anticipated that China would set its economic growth goal for next year at 8 percent, but the World Bank forecast it could grow by only 7.5 percent year-on-year in 2009. In contrast, the top think-tank Chinese Academy of Social Sciences (CASS) forecast it would be 9.3 percent.

"It would be more realistic to put the forecast at 8 percent, taking into consideration both the gloomy global situation and China's determination to boost its economy," said Dong Yuping, senior economist with the CASS' Institute of Finance and Banking. "It will hinge on the effect of the country's stimulus efforts."

World Bank chief economist Justin Yifu Lin also told Xinhua News Agency Wednesday that China could manage to create 8 percent annual economic growth next year.

China has launched a 4 trillion yuan ($586 billion) stimulus plan on Nov 9 and the central bank slashed interest rates by 1.08 percentage points – four times its usual margin – on Nov 26.

Major policies to be launched to stimulate the economy include:

Improving macroeconomic regulation

Increasing inputs into agriculture to support the rural economy

Supporting industrial growth

Ensuring employment and creating more jobs

Continuing the country's opening-up drive

Keeping healthy and stable development of capital and real estate markets