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China to deepen economic reforms in 2015: Xinhua
December 5, 2014 / 9:36 AM / in 3 years

China to deepen economic reforms in 2015: Xinhua

BEIJING (Reuters) - China will pursue prudent monetary policy and pro-active fiscal policy next year, the ruling Communist Party’s elite decision-making body was quoted as saying on Friday in a reiteration of the government’s existing stance.

China will deepen reforms in the world’s second-largest economy in 2015 as it tries to boost domestic demand and further urbanise the country, Xinhua quoted the politburo as saying.

Crucially, the politburo said China must balance the competing needs of stabilizing and reforming its economy, a nod to an on-going debate about how it can stimulate its sagging economy without compromising its quest for change.

After 30 years of double-digit growth that lifted hundreds of millions from poverty but also polluted the air, land and water, China wants to remake its growth model into one that is greener and more sustainable.

The reform agenda was made more difficult this year by a cooling economy. China is experiencing its worst downturn in at least six years.

Indeed, after saying for months that China does not need any big stimulus, the central bank unexpectedly cut interest rates for the first time in over two years on Nov. 21 in a move that it described as being “neutral” for policy.

The 25-member politburo acknowledged the risks faced by the economy on Friday.

It said the economy was beset by difficulties and challenges that authorities needed to monitor, even though it noted that the Chinese growth engine remained in good shape.

Authorities will pay close attention to the labour market and work on reducing poverty, the politburo said, repeating the government’s stance that keeping unemployment low is a priority.

The world’s largest exporter of goods will also balance its import and export of products and investment capital, the Xinhua news agency quoted the politburo as saying.

Slugged by unsteady exports, a sagging housing market and falling domestic investment, the economy is estimated by some analysts to likely grow by 7.4 percent this year.

That is its slackest rate in 24 years and just shy of the government’s 7.5 percent target.

With the economy so lukewarm - growth in exports, investment and factory output are all expected to have lost further momentum in November - there is speculation that Beijing may cut its annual growth target to 7.0 percent next year.

Some domestic media reported this week that China would kick off its annual economic work conference on Dec. 9, when it will decide the growth blue-print for the economy in 2015.

Reporting by Shao Xioayi and Koh Gui Qing; Editing by Kim Coghill, Robert Birsel

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