China to Continue Fiscal, Monetary Policy

Updated: 2013-03-05 ( Xinhua) - China will continue a "proactive fiscal policy" and a "prudent monetary policy" in 2013 to expand the economy by 7.5 percent and keep the consumer price index increase at around 3.5 percent, according to a government work report to be delivered by Premier Wen Jiabao at the parliament's annual session Tuesday.

The Chinese government has upheld its tuning of "proactive fiscal policy and prudent monetary policy" in the government work reports since 2011, vowing to maintain continuity and stability of policies, and make them more forward-looking, targeted and flexible.

"We should make our proactive fiscal policy play a bigger role in ensuring steady growth, adjusting the structure, advancing reform, and benefiting the people..., maintain a balance between boosting economic growth, keeping prices stable and guarding against financial risks," reads the report to be delivered by Premier Wen to the first session of the 12th National People's Congress (NPC), which opens in Beijing Tuesday.

Proactive fiscal policy denotes a moderately expansionary policy to create demand and stimulate economy by ways mainly of expanding domestic demand.

The ultimate goal of a prudent monetary policy is to maintain price stability as it usually means a relatively expansionary monetary policy while the economy turns sluggish or a relatively tight monetary policy while the economy shows overheating signs.

In 2009 and 2010, China adopted a "proactive" fiscal policy and a "moderately easy" monetary policy to stimulate the economy due to the impact of the global financial crisis, which marked a shift from a "prudent" fiscal policy and a "tight" monetary policy in 2008 aimed at bringing down spiking inflation then.