Wen pledges hefty investment under tight monetary policy
(Xinhua)
Updated: 2008-03-05 10:43

China is to follow a tight monetary policy to address the still-unsolved problem of excessive liquidity, and in the meantime, the government also pledges to add another several hundred billion yuan in additional funds to boost agriculture, education, medicare and strengthen the nation's social safety net.

Addressing the First Session of the 11th National People's Congress, Premier Wen Jiabao said in his government work report that the decision to follow a tight monetary policy is based on "the strong possibility of a resurgence in fixed asset investment, continued excessive supplies of money and credit, the still-unsolved problem of excess liquidity, and considerable inflationary pressure."

However, Wen said a prudent fiscal policy is still needed to "promote structural adjustment and balanced development," and increased expenditures necessary "to shore up weak links, improve people's lives and deepen reform."

China's fiscal policy has been kept abreast with its monetary policy in the past, whether they were pro-active, prudent or tight. Economists said that the breakaway from tradition this year indicates the government efforts to prevent the economy from overheating while turning the fruit of the country's soaring economic growth in the past three decades to benefit more the country's general public, especially those in the rural areas and the urban poor.

When the general public have more to spend, they can turn into another force to drive up the nation's economic development in the future, observers said.