BIZCHINA / Top Biz News |
China to maintain prudent monetary, fiscal policies in 2007(Xinhua)Updated: 2006-11-06 09:08 China will maintain its prudent monetary and fiscal policies next year in face of anticipated heated investment, excessive bank loans and an expanding trade surplus. Two senior officials disclosed the trends of China's macro-economic policies next year at the 2007 China Industrial Development Forum at the weekend. China would continue its prudent fiscal policy and reduce its deficits slightly next year, said Vice Minister of Finance Lou Jiwei, adding the reduction would be small as more money would go to education, health and rural development. The monetary policy would also be prudent in a bid to maintain the continuity and stability of the macro-control policies, said Su Ning, vice governor of the People's Bank of China (PBOC). China's gross domestic product grew by 10.7 percent in the first nine months this year. Fixed asset investment was up 27.3 percent, 1.2 percentage points higher than the rise at the same time last year. New bank loans totaled 2.76 trillion yuan (349 billion US dollars) in the first nine months, overshooting the planned annual quota of 2.5 trillion yuan (316 billion US dollars). Meanwhile, the trade surplus reached 109.85 billion US dollars, compared with 101.88 billion dollars for 2005. "High bank savings and low consumption have become one of the main problems for China's economy, directly causing fixed asset investment to race ahead," said Su, adding that the proportion of consumption to the national economy had dropped 10 percentage points in the past decade while that of savings had been climbing. Su said the government deposits in the central bank had reached a record high and about 500 billion yuan (62.5 billion US dollars) would be withdrawn by the end of the year. Its entry into the market would increase the money supply and lead to a rise in bank loans. The PBOC would take measures to control possible loan increase, said Su. China tightened fiscal policy two years ago in the hope of capping the galloping fixed asset investment and preventing possible overheating of the economy. As investment kept soaring in the first three quarters, some analysts held that China should tighten money supply to help strengthen macro-economic control. "What we should do now is to strictly carry out the macro-economic control policies and keep them stable," said Zhu Zhixin, vice minister of the National Development and Reform Commission. Next year, Zhu said, the government would continue its macro-economic control measures while encouraging investment in education, science and rural development. More capital would be channeled to environmentally friendly construction to facilitate economic restructuring, said Zhu. (For more biz stories, please visit Industry Updates) |
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