China’s economic growth is likely to speed up this quarter, but the government will stay the course on its fiscal stimulus and loose monetary policy, senior officials said Monday. Despite the emphasis on policy continuity, an unmistakable shift toward greater optimism in China’s official rhetoric has led analysts to conclude that Beijing is thinking about how to start unwinding its ultra-loose pro-growth policies. Restating the thrust of a cabinet statement issued last week, Vice Premier Li Keqiang said the economy had performed better than expected and its recovery was now on solid ground. “The pace of growth is quickening quarter by quarter,” Li told an international tax conference. “China is confident and is capable of achieving its full-year economic targets.” The upturn in growth has also put China on track to meet its budget targets after a difficult start to the year, giving it the fiscal firepower to continue supporting the economy, Vice Finance Minister Wang Jun told the conference. Driving home the point that Beijing feels little pressure to tighten policy, central bank vice governor Yi Gang told a separate forum that the country faced no serious inflation threat for the foreseeable future.
“Our near-term policy will focus on preventing deflation, but we should also have a balanced policy and adopt a forward-looking view,” Yi said, adding he expected consumer price inflation to turn positive on a yearly basis this quarter after eight straight months in negative territory.
China set itself a goal this year of 8% growth, which officials see as the minimum needed to maintain social stability, and there is little doubt it will hit that mark. GDP growth accelerated to 8.9% in Q-3, compared with a year earlier, from 7.9% in Q-2.
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