President Hu Jintao and China's political elite have made preventing economic overheating and curbing inflation their top priorities for next year, state media reported yesterday. The decision was made on Tuesday at a meeting of the Politburo, the 25-member group at the summit of the ruling Communist Party that makes all important decisions in China.
"Although the country has made headway in maintaining stable economic growth, problems exist," the China Daily reported, citing what appeared to be the conclusion of the meeting that was chaired by Hu.
"The top priority next year will be to prevent relatively fast economic growth from overheating and stop structural price rises from evolving into entrenched inflation."
"Structural price rises" refer to rising prices on food items, caused by factors such as a shortfall in the production of pork. Premier Wen Jiabao said last week that he expected the mainland economy to expand by 11.5 percent in 2007, making it the fifth consecutive year of double-digit economic growth.
Wen said yesterday China will let market forces play a greater role in setting the rate of the yuan, following talks with European officials.
EU officials are dismayed by the yuan's steady slide against the euro, which they say is exacerbating global imbalances and fuelling protectionism in Europe.
"China will continue to perfect the renminbi exchange rate regime in a gradual, proactive and manageable manner, give a further role to the market in determining the exchange rate, and will bring flexibility to the renminbi with a view to enabling capital account convertibility," Wen said.
