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Spending by govt may boost economy

[ 2011-12-14 16:21]     字号 [] [] []  
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The government has room for maneuver on the economic front if the US outlook does not improve and Europe remains mired in the debt crisis, a deputy chief of the World Bank said.

Lin Yifu, the World Bank's senior vice-president and chief economist, told China Daily that "Government spending, rather than bank lending, may be used to boost the infrastructure and manufacturing sectors to ensure economic expansion in 2012.”

Lin acknowledged that the eurozone's worsening sovereign debt crisis as well as the sluggish US economy would take a toll on the world's second-largest economy in the coming year. But a hard landing is unlikely, he said, and predicted that GDP growth will stay above 8 percent in 2012.

He was speaking as senior Chinese leaders held their annual Central Economic Work Conference in Beijing to hammer out a framework for 2012 economic policies.

President Hu Jintao said last week that the country will maintain robust economic growth in the year ahead. Prudent monetary and proactive fiscal policies may come more into play.

However, a slight shift in macroeconomic policies is possible, considering that inflation has eased, analysts and economists have suggested.

The November consumer price index (CPI), a main gauge of inflation, declined sharply to 4.2 percent, the year's lowest, from a 37-month high of 6.5 percent in July, according to the National Bureau of Statistics. Economists predict that inflation in 2012 may drop to less than 4 percent.

Wang Tao, head of China economic research at UBS Securities, expected slightly more flexibility.

"The government is likely to target 8 percent GDP growth and 4 percent inflation in 2012, supported by a proactive fiscal policy and a stable monetary policy," she said.

Government investment is expected to contribute more to GDP next year.

"The government has much less debt (about 25 percent of GDP) than many developed countries, so any concern about a debt crisis in China is groundless," Lin said.

"But bank lending should be tightened because easing monetary policy may increase marketliquidity and inflation may be revived."

China's fiscal revenue had climbed to 9.73 trillion yuan ($1.53 trillion) at the end of November, 26.8 percent higher than a year earlier.

It exceeded the year's budget of 8.97 trillion yuan for central and local governments, accordingto data released by the Ministry of Finance on Sunday.

Meanwhile, fiscal expenditure increased to 8.9 trillion yuan, a year-on-year increase of 24.3 percent, the ministry said.

Some economists forecast that policymakers might cut taxes next year to spur domestic consumption while funding infrastructure projects.

(中国日报网英语点津 Rosy 编辑)

Spending by govt may boost economy

About the broadcaster:

Spending by govt may boost economy

Emily Cheng is an editor at China Daily. She was born in Sydney, Australia and graduated from the University of Sydney with a degree in Media, English Literature and Politics. She has worked in the media industry since starting university and this is the third time she has settled abroad - she interned with a magazine in Hong Kong 2007 and studied at the University of Leeds in 2009.