Chinese leaders push economic rebalancing
(Reuters/AFP)
Updated: 2005-11-30 07:27

China's current account surplus, one of the counterparts of America's huge current account deficit, rose ninefold in the first half of 2005 from a year earlier, topping 8 percent of gross domestic product.

President Hu Jintao shows the way to Mongolian President Nambariin Enkhbayar (L) during a welcome ceremony at the Great Hall of the People in Beijing November 28, 2005. [Reuters]

Beijing is trying to reduce the surplus by pressing ahead with gradual currency reforms, which will let supply and demand play a greater role, and by spurring consumption.

That same policy thrust is also at the heart of the Communist Party's 11th Five-Year plan (2006-2010), which aims to tilt growth away from exports and investment and calls for greater spending on public services to help the poor. The program is due to be endorsed by this week's conference.

Economists said the meeting was likely to keep monetary and fiscal policy basically stable in 2006 with the aim of achieving economic growth of 8 percent -- the same goal as this year.

"I think economic growth will be kept at a steady, relatively fast pace next year with the priority given to changing the growth model through structural adjustments," said an influential economist at the National Development and Reform Commission.

The economy has grown by over 9 percent for more than two years, despite government measures since mid-2003 to rein in overheated sectors such as real estate and steel.

The target for inflation in 2006 could be about 2 percent, well below this year's initial 4 percent goal, reflecting falling grain prices and overcapacity, the sources said.

The government issues annual economic targets as a legacy of central planning. The goals, which are no longer mandatory, will be formally announced in March.