China to carry on with economic stimulus: Vice President

Written by Reuters
Friday, 09 October 2009 22:33

BRUSSELS: China will carry on with its fiscal stimulus and loose monetary policy as the country's economic recovery is not yet on a solid footing, Chinese Vice President Xi Jinping said on Friday, Oct 9, according to Reuters.
Speaking at a seminar during a visit to Belgium, Xi forecast that a return to growth across the world would be slow and gradual. He vowed to stick to an agreement on overhauling the world's economy reached at a recent summit of the G20 countries.

"The overall economic situation in China is stabilizing and improving," he said, but cautioned: "We have yet to put economic recovery on a stable and solid basis."

China is implementing a 4 trillion yuan ($586 billion) stimulus spending plan to prop up the economy during the worst global downturn since World War Two.

Its economic growth, seen at more than 8 percent in the third quarter compared with a year earlier, is among the highest in the world, but China faces international calls to boost its domestic demand and reduce savings.

"We will continue to implement proactive fiscal policy," Xi said.

China's monetary policy would remain loose, he said, echoing statements from the People's Bank of China.

"We will continue to implement ... moderately easing monetary policy," he said through an interpreter.

His statement chimed with remarks by U.S. Federal Reserve Chairman Ben Bernanke, who said on Thursday that the U.S. central bank must continue to prop up the economy for an extended period.

"Accommodative policies will likely be warranted for an extended period," Bernanke had said.

Xi said signs of recovery had appeared in the global economy, but any return to growth would be "long and tortuous."He also said China and the 27-country European Union should improve their dialogue on macroeconomic and financial issues while working to oppose protectionism in trade.

"We should ... strengthen dialogue on macroeconomic and financial issues," Xi said.

The EU countries that use the euro and the United States are keen on China letting its currency, the yuan, appreciate.

"We should follow on the outcomes of the three G20 financial summits -- economic financial coordination, push for reform of the international financial system, coordination on international financial supervision," Xi said. - Reuters