China will implement prudent monetary and fiscal policies next year in a bid to maintain fast but steady economic growth and coordinate economic and social development.

 

Wang Xiaoguang, an economist with the National Development and Reform Commission, told Xinhua that the Chinese government is likely to "link short-term macro control measures with long-term industrial restructuring moves" and make a bigger effort to change the pattern of economic growth.

 

The government will continue to rein in investment in overheated sectors and channel money towards fields that concern people's livelihood.

 

He said the government will use market mechanism, such as interest rate adjustments and deposit reserve ratios, to strengthen macro control measures in 2007.

 

He believes that the government will try to reduce the widening gap between urban and rural areas by directing more investment to the countryside.

 

However, investment in rural areas will not increase sharply in the short term, and rural development will mainly be driven by industrialization and urbanization, he said.

 

To keep the economy growing fast and steadily, China should expand domestic demand and stimulate consumption next year because both exports and investment - two driving forces of China's economy - are expected to slow down, he said.

 

China should give consumption a key role in economic growth, by improving the country's social security system, strengthening people's purchasing power and boosting the service sector.

 

Since the beginning of the year, China's economy has maintained robust growth with low inflation. Macro-economic control policies have taken effect, slowing GDP growth, fixed assets investment, money supply and bank loans.

 

But the country should continue to restructure the economy and improve the quality and efficiency of the pattern of economic growth, he said.

 

(Xinhua News Agency December 5, 2006)