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A high-level meeting of the Community Party of China (CPC) held Wednesday set the tone for China's economic policy next year, declaring that China will exercise prudent fiscal and monetary policies in 2005.
The policy shift from "proactive to prudent" fiscal and monetary policies was made "to conform with changes in China's macro-economic situation and consolidate the achievements of macro-control," says the official decision reached at the meeting of the Political Bureau of the CPC Central Committee.
The meeting, held to analyze the current economic situation and plan for economic work next year, also stressed beefing up coordination between various macro-control policies and measures, controlling total economic output properly and adjusting economic structure" to promote steady and relatively fast economic growth" in 2005, officials at the meeting said.
According to participants, addressing issues of rural areas, agriculture and farmers will remain the top priority of the Party next year. Support to agriculture and rural economic growth "will be further enhanced to promote growth in grain production and farmers' income."
Other major tasks of the next year's economic work addressed at the meeting include:
-- Adjusting economic structure in line with domestic and international market situations and with an eye to improving core competitive power;
-- Continuing to control investment in fixed assets by strictly controlling land and credit supply;
-- Deepening reform of the country's economic system and improving the quality and level of opening up;
-- Raising the conservation consciousness of the entire nation, vigorously promoting conservation of energy and important resources and speeding up the development of the "recycled economy";
-- Increasing employment and the re-employment of laid-off workers, improving social security, further stimulating consumption and concretely safeguarding the fundamental interests of the people;
-- Planning economic and social development as a whole, speeding up the development of science, education and other social undertakings, properly handling the relationship between reform and development and safeguarding social stability.
Participants stressed that although China had made marked economic achievements, the Chinese economy still faced a few problems and challenges that "urgently need to be dealt with."
These problems and challenges include a still unfirm foundation for the growth of grain production and farmers' income, lingering tendency of over-investment and some deep-rooted problems hindering healthy economic growth.
According to the meeting, chaired by Chinese President and General Secretary of the CPC Central Committee Hu Jintao, a central conference on economic work will soon be held to make arrangements for relevant work.
Analysts in Beijing say the decision officially proclaimed the end to the proactive policy that has been practiced in China for seven years. The prudent policy is necessary to prevent China from suffering big fluctuations.
China's proactive fiscal policy, in place since 1998, has resulted in seven years of world-stunning economic growth.
"However, the Chinese economy showed signs of over-investment, overheating in certain sectors and increasing inflation pressure in the beginning of 2004," said Yi Xianrong, a finance specialist with the Chinese Academy of Social Sciences.
"A prudent policy is the logical choice to curb overheating of the economy, maintain steady development and improve the efficiency of the economy," said Hang Lin, associate research fellow with the Institute of Macroeconomics under the Chinese Academy of Social Sciences.
(Xinhua News Agency December 2, 2004)
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