China's Wen says to start policy fine-tuning in
SHANGHAI (Reuters) - China will start to fine-tune its economic policies in the first quarter, Premier Wen Jiabao said in remarks published by state media Monday, the most explicit indication yet of further monetary policy easing.
"We should pay attention to the economic situation in January and the first quarter. We should see things early and act quickly and pre-emptive steps and fine-tuning needs to start from the first quarter," Wen was quoted as telling a meeting held to seek experts' policy opinions last week.
Data released Friday showed spluttering domestic demand as imports crumbled to their lowest in more than two years and weaker-than-forecast bank lending signaled to investors that policymakers would soon make a fresh bid to bolster growth.
The government has already pledged to fine-tune economic policies since late 2011 to head off sharper growth slowdown.
The People's Bank of China cut banks' reserve requirements for the first time in three years in November. More reserve ratio cuts are expected in coming months.
A Reuters poll conducted last month showed the central bank may cut the reserve ratio by a total of 200 bps throughout 2012 to 19 percent.
The market had expected the government to cut RRR ahead of the Chinese Lunar New Year last month, but the central bank opted to use open market operations to inject cash into the economy. Wen's comments came as the market had already cooled its expectations of such a central bank move more recently.
So far the policy fine-tuning has focused more on cutting taxes and red tape for the small businesses that provide about 75 percent of the jobs in China.
Lunar New Year distortions will make policymakers wary of any hasty reaction. Most analysts expect them to assess January and February data combined before deciding whether the current policy of gentle easing should be intensified. Continued...