Politburo yesterday decided to continue helping enterprises in order to support recovery. Beijing is not interested in adopting measures wanted by the United States and the European Union (ex, re-evaluation of yuan), but only in strengthening domestic production and economic recovery.

Beijing (AsiaNews/Agencies) – Mainland China vowed to continue its fiscal stimulus spending and maintain appropriate monetary policies this year to help its enterprises and economy until their full recovery from the effects of the world financial crisis. The decision was taken by politburo of the Communist Party chaired by President Hu Jintao during a review of the annual government work report to be delivered at the annual plenum of the National People's Congress, which begins on 5 March.

After the US central bank decided last week to raise its discount lending rate, all eyes were on China. The mainland's economy, which expanded by 8.7 per cent last year, is expected to lead the world’s economic recovery.

The United States and the European Union want Beijing to raise the value of yuan, which they view as undervalued, and stop financing export companies whose products have invaded Western markets with below cost goods.

China is however more interested in supporting its own enterprises. So far, the Chinese government has spent 4 trillion yuan on a stimulus package, and does not appear interested in changing its exchange policy, at least until the recovery is stronger.

“The economy has not yet recovered to the desired level and the government still needs to work on the 'three chariots' of our economy—exports, domestic consumption and investment,” said Wei Jie, an economics professor at Tsinghua University in Beijing. “The tightening will only be very minor because the government still needs to encourage consumption to support economic growth,” he added.

Businesses have also been helped with record loans last year and these were blamed for speculative surges in property and commodity prices. This raised concerns over asset bubbles and this month the China Banking Regulatory Commission ordered banks to tighten personal and business loans.

Zhao Xijun, a finance expert at Renmin University, said the central government faced a delicate situation. It had to strike a balance between boosting consumption and preventing inflation.

“Prices have gone up a lot since the latter half of last year, and this year's indicators show that the trend is going up," Zhao said,

The Chinese government is still faced with the task of evaluating carefully the effectiveness of the projects launched under the stimulus package to avoid overcapacity. “Most of the government spending this year will be to finish projects that were launched last year,” he said.

• china
• stimulus
• package
• yuan
• recovery
• global
• financial
• crisis