China makes growth guarantee against grim global economy

BEIJING (Reuters): China pledged to guarantee growth in the face of an “extremely grim” outlook for the global economy in 2012, as its annual policy-setting conference closed on Wednesday with a series of commitments to deliver economic stability.

 Laying out a blueprint for the world’s second-biggest economy in the year ahead, Beijing promised to keep monetary policy “prudent” and fiscal policy “pro-active” while ensuring stable consumer prices -- language broadly in line with previous commitments.

But it was China’s view on the global economic backdrop that was a sign of the policy challenge that could lay ahead.

“Looking into next year, the trend in the global economy on the whole is grim and complicated. Uncertainties are rising around a recovery in the world economy,” said a statement published on the official Xinhua news agency after the end of the annual conference.

Beijing’s wish to downplay those risks domestically was apparent in all the economic plans outlined, which broadly endorsed a decision by China’s top leaders last week to avoid big policy changes before a critical leadership succession in 2012 that will see the nation’s top two leaders retire.

“Stability means to maintain basically steady macro-economic policy, relatively fast economic growth, stable consumer prices and social stability,” one of several statements carried by the official Xinhua news agency said.

The yuan’s value will be kept “basically stable”; interest rate and exchange rate reforms will continue; measures aimed at calming the property market will be maintained; exports will kept steady whilst imports boosted to balance trade.

Economists were sanguine in their initial take on the pronouncements from the single most important annual meeting in China’s economic calendar.

They singled out the commitment to domestic economic stability as a sign of steady-as-she goes policies in the year ahead.

“This year it’s a lot less drama,” said Tim Condon, an economist at ING Bank in Singapore. “The statements are much less thematic than a year ago when they moved from a moderately loose to a prudent stance.”

“This is the case of an economy where policy does not need fixing so they are just staying the course.”