Leaders meet to chart economic policy

December 8, 2008

, BEIJING, December 8 – China\’s top leaders met in Beijing Monday for a three-day conference that will chart a course for key economic policies in 2009 as the nation struggles to navigate the global financial storm.

The annual Central Economic Work Conference is the most important economic policy making event of the year, usually involving key figures such as President Hu Jintao and Premier Wen Jiabao.

And this year\’s meeting looks to be the most pivotal in a decade due to the rapidly deteriorating world economy and forecasts that China\’s export-dependent economy will grow at its slowest rate in nearly two decades.

"The meeting this year is very critical — decisions have to be made immediately, otherwise the economy will have problems as it is already heading towards a hard landing," said Andy Xie, an independent economist in Shanghai.

"The Chinese economy is driven by exports and the country is the biggest beneficiary of economic globalisation. The world economic crisis definitely has a massive impact on China," he said.

The conference is expected to focus on how the government will use its fiscal and monetary levers to fuel job creation and domestic demand while reducing excessive dependence on exports, the state-run China Daily said.

"The meeting will detail measures for achieving at least eight percent growth in 2009," Song Hong, a researcher with the Chinese Academy of Social Sciences (CASS), a top government think tank, was quoted as saying.

Growth of eight percent is the minimum required to keep the unemployment situation under control, Song said.

China\’s economic growth slowed to nine percent in the third quarter, the lowest in five years.

The World Bank has forecast the country\’s growth will drop to 7.5 percent in 2009, the lowest level since 1990.

China\’s leadership is believed to be deeply concerned that slowing growth could throw millions out of work, creating social instability.

Another agenda item is the possibility of allowing a depreciation of the yuan currency to boost exports.

The yuan has dropped against the dollar recently, reversing a three-year trend, in what many experts believe is a policy shift by Beijing to cushion the export industry by making Chinese goods more competitive overseas.

Leaders are also expected to discuss a proposal by the finance ministry to let the 2009 fiscal deficit swell to 280 billion yuan (40.7 billion dollars), up 56 percent from this year, to help maintain growth, other reports said.

In the past few months Beijing has already introduced a series of monetary and fiscal policies aimed at blunting the impact of the global meltdown, including a four-billion-yuan spending package and steep interest rate cuts.

"The framework of polices has already been set. (The conference) will elaborate on the details and make improvements to measures that were introduced in a rush," Yi Xianrong, a researcher with CASS, told AFP.

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