Published January 23, 2010
Tighter China fiscal, monetary stance seen
Seven missing words in Q4 GDP announcement sparks speculation of official policy adjustment in March
(Beijing)
SEVEN missing words in a statement issued on Thursday by China's statistics bureau fuelled speculation that the government will officially change its fiscal and monetary policy stance.
MAKING A POINT
Mr Ma shows the GDP growth chart at a press conference in Beijing on Thursday. He cites the 'moderately loose' pledge in a session with journalists
The agency's fourth-quarter economic growth announcement omitted a reference to maintaining a 'moderately loose monetary policy' and a 'proactive fiscal policy' in its outlook section. While Ma Jiantang, who heads the bureau, later cited the 'moderately loose' pledge in a question-and-answer session with journalists, the written statement mirrored the same omission by Premier Wen Jiabao in a Jan 19 report.
'China is clearly moving to adjust both its policy stance and the language used to describe that stance,' said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. 'The rhetoric of the new policy mantra is unlikely to be finalised before the National People's Congress' meets in March, he said.
Accelerating economic growth and rising property and consumer prices mean China may be approaching a formal end to the policies adopted in November 2008 to counter the global financial crisis.
Gross domestic product rose 10.7 per cent in the fourth quarter from a year earlier, the government reported on Thursday, the fastest pace since 2007.
Contradictions between the statistics bureau's statement and Mr Ma's remarks may reflect that China's policy won't be formally changed until March, said Lu Ting, a Hong Kong-based economist with Bank of America-Merrill Lynch. Mr Wen's draft work report is scheduled to be accepted at the NPC meeting that month.
'To be politically correct, all senior officials should until then say 'we will stick to the current policy',' Mr Lu said. 'Then from March we will have something new.'
Chinese central bank governor Zhou Xiaochuan reaffirmed the 'moderately loose' stance at a government meeting in Beijing on Thursday after the GDP announcement, a video clip posted on state broadcaster CCTV's website yesterday showed. He added that the People's Bank of China will keep policies flexible, support economic growth, control inflation expectations and ensure credit goes to key sectors.
In Thursday's written statement, Mr Ma only referred to monetary and fiscal stances when summarising 2009 economic work, while in the previous quarterly release, the key phrasing was used in the context of the policy outlook for 'the following period'. The language, equivalent to 16 Chinese characters, was also left out of Mr Wen's draft report to the State Council this week.
The economy's expansion has now accelerated for three straight quarters, driven by the unprecedented four trillion yuan (S$820 billion) stimulus package, subsidies for consumer purchases and a monetary stance that allowed a record 9.59 trillion yuan of new loans last year.
China's benchmark one-year interest rate will rise by 1.08 percentage point this year from 5.31 per cent now, and the first move may come as early as this quarter, said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. -- Bloomberg
Tighter China fiscal, monetary stance seen
Seven missing words in Q4 GDP announcement sparks speculation of official policy adjustment in March
(Beijing)
SEVEN missing words in a statement issued on Thursday by China's statistics bureau fuelled speculation that the government will officially change its fiscal and monetary policy stance.
MAKING A POINT
Mr Ma shows the GDP growth chart at a press conference in Beijing on Thursday. He cites the 'moderately loose' pledge in a session with journalists
The agency's fourth-quarter economic growth announcement omitted a reference to maintaining a 'moderately loose monetary policy' and a 'proactive fiscal policy' in its outlook section. While Ma Jiantang, who heads the bureau, later cited the 'moderately loose' pledge in a question-and-answer session with journalists, the written statement mirrored the same omission by Premier Wen Jiabao in a Jan 19 report.
'China is clearly moving to adjust both its policy stance and the language used to describe that stance,' said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. 'The rhetoric of the new policy mantra is unlikely to be finalised before the National People's Congress' meets in March, he said.
Accelerating economic growth and rising property and consumer prices mean China may be approaching a formal end to the policies adopted in November 2008 to counter the global financial crisis.
Gross domestic product rose 10.7 per cent in the fourth quarter from a year earlier, the government reported on Thursday, the fastest pace since 2007.
Contradictions between the statistics bureau's statement and Mr Ma's remarks may reflect that China's policy won't be formally changed until March, said Lu Ting, a Hong Kong-based economist with Bank of America-Merrill Lynch. Mr Wen's draft work report is scheduled to be accepted at the NPC meeting that month.
'To be politically correct, all senior officials should until then say 'we will stick to the current policy',' Mr Lu said. 'Then from March we will have something new.'
Chinese central bank governor Zhou Xiaochuan reaffirmed the 'moderately loose' stance at a government meeting in Beijing on Thursday after the GDP announcement, a video clip posted on state broadcaster CCTV's website yesterday showed. He added that the People's Bank of China will keep policies flexible, support economic growth, control inflation expectations and ensure credit goes to key sectors.
In Thursday's written statement, Mr Ma only referred to monetary and fiscal stances when summarising 2009 economic work, while in the previous quarterly release, the key phrasing was used in the context of the policy outlook for 'the following period'. The language, equivalent to 16 Chinese characters, was also left out of Mr Wen's draft report to the State Council this week.
The economy's expansion has now accelerated for three straight quarters, driven by the unprecedented four trillion yuan (S$820 billion) stimulus package, subsidies for consumer purchases and a monetary stance that allowed a record 9.59 trillion yuan of new loans last year.
China's benchmark one-year interest rate will rise by 1.08 percentage point this year from 5.31 per cent now, and the first move may come as early as this quarter, said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. -- Bloomberg