The government will speed up economic structural adjustment and give priority to improving people’s well-being (CHINURBN), Hu said in the five-minute New Year’s Eve speech carried on state television and radio.
“We will continue to manage well the relationship between stable and relatively quick economic growth, structural adjustment and inflation,” Hu said. “Global interdependence is deepening while instability and uncertainty in the world economy’s revival is increasing.”
Hu gave no detail about how his government, which is set to start transferring power to China’s next generation of leaders in the coming months, plans to manage an economy that Nomura Holdings estimates will expand at 7.9 percent in 2012, the slowest pace in 13 years. Inflation (CNCPIYOY) is moderating after reaching a three-year high of 6.5 percent in July.
The government is wrestling with the aftermath of past stimulus, including the debt burdens of local-government investment vehicles. Companies also face rising labor costs, and Communist Party leaders have recently sought to defuse protests over illegal land use and environmental pollution.
The Shanghai Composite Index (SHCOMP) tumbled 22 percent in 2011, the most since 2008 and extending 2010’s 14 percent plunge, on concerns over Europe’s debt crisis and risks of a future wave of bank bad loans at home.
China’s manufacturing (EC11CHPM) contracted for a second month in December as Europe’s debt crisis cut export demand, fueling speculation that the central bank may cut lenders’ reserve requirements within days.
Earlier today, the head of China’s central bank, Zhou Xiaochuan, said the country would maintain a “prudent” monetary stance and ensure that policy remains stable in 2012.
The nation’s economic growth cooled to 9.1 percent in the third quarter, the least in more than two years, and export growth in November was the weakest since 2009 excluding seasonal distortions.
While the 25-member Politburo affirmed an unchanged “proactive” fiscal stance for 2012 in December, a Nov. 30 cut in banks’ reserve requirements indicated a shift toward a bigger emphasis on supporting growth.
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