China: China pledges to buttress growth against global headwinds, while containing inflation
December 14, 2011
On 12-14 December, leaders of China's ruling Communist Party held their annual Central Economic Work Conference in Beijing and announced that policymakers will maintain the current proactive fiscal policy and prudent monetary policy into next year. This suggests that the government will try to promote growth, while simultaneously keeping inflation under control, in order to ensure social stability. In addition, authorities also noted that given the grim and complicated global outlook, monetary policy will need to be timely and respond appropriately to changing macroeconomic conditions. The property market has recently been in the spotlight and authorities reiterated that policy in this area will remain tight until prices fall to a reasonable level and that funding for social housing will increase. The conference also highlighted that some reforms will be pushed forward in 2012. These will include: an extension of the property tax to other cities; a reform of value-added tax (VAT); further development of capital markets and liberalisation of interest rates. The authorities also stated that the exchange rate will remain broadly stable. The Conference did not unveil any economic targets for 2012, but analysts expect that objectives will be in line with current GDP growth of 8% (or above) and the CPI inflation rate of 4.0% targeted in 2011.