China has kicked off a conference on setting policy with a pledge to guarantee continued growth, despite an "extremely grim" global economic outlook for the year to come. Economic stability was at the top of the list, with a number of declarations committed to that objective.
Reuters reported that the conference, which began Wednesday, started with a promise from Beijing to maintain "prudent" monetary policy, "proactive" fiscal policy and stable consumer pricing. These are all goals the government has announced before, and their restatement led economists to believe that China intends more fine-tuning of existing policies than drastic action such as monetary easing, despite the government's desire to maintain growth.
Investors had apparently hoped for more decisive action; in the wake of the policy statements the Shanghai stock market dropped 0.9% to close at a 33-month low.
Tang Yunfei, an economist with Founder Securities in Beijing, said of the pledge, "It seems the government, at least for now, is not ready to conduct a blanket policy relaxation. But it also made clear that the policies will be flexible, which means the government will react when slowdown trends are clear."
The official Xinhua news agency published a statement after the conference that said in part, "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." It added that Beijing would keep the yuan "basically stable" and that it would continue interest rate and exchange rate reforms.
The government also intends to maintain measures designed to soothe the property market and to hold exports steady while raising imports to balance trade. It added, "Stability means to maintain basically steady macro-economic policy, relatively fast economic growth, stable consumer prices and social stability."