China says to maintain stable economic policies

DAVOS, Switzerland (Reuters) - The Chinese economy has rebounded following steps taken to deal with the crisis but the government needs to stick with its moderately easy monetary policy, Vice-Premier Li Keqiang said on Thursday.

The government also needed to maintain its active fiscal stance even if the world’s third-largest economy was likely to expand at a rapid clip in 2010, Li said in a speech delivered at the World Economic Forum in the Swiss mountain resort of Davos.

“There still remain many uncertainties in (the) domestic and external economic environment,” said Li.

“To tackle these problems, we will keep continuity and stability of our macro economic policies, continue to follow a proactive fiscal policy and moderately easy monetary policy...,” he said.

Steering clear of the sensitive topic of the Chinese currency, Li also said that China needed to manage inflation in an appropriate way.

Underscoring major challenges such as pressures on natural resources and environmental woes, Li reiterated government goals of trying to spur consumption as a major driver of economic growth so that China could lean less on exports.

Such moves would create ample business opportunities for foreign businesses, he said in response to the only question posed after his speech concluded.

China would also tackle climate change, cooperating with the international community, and ensure that economic growth became more efficient with regards to the use of resources and environmental concerns, he said.

Turning to the global economic crisis and the role of global governments, Li called for greater coordination and careful consideration of the way in which countries unwound stimulus packages.

“The international community should increase coordination and cooperation in macro-economic policies, identify the right direction and priorities of their economic policies...,” he said.

Countries needed to withdraw their stimulus policies at the appropriate time to ensure that the global economy staged a complete recovery as soon as possible, he said.

Li also used his speech to sound a warning over protectionism.

Chinese state-owned firms have been blocked from proposed resource investments in the United States, Canada, Australia and Chile over the past five years, due to labor opposition and national security concerns.

“Trade protectionist practice will only exacerbate the economic crisis, slow down the recovery process and ultimately harm the interests of the very countries who apply such measures,” he said.

Conclusion of the Doha round of trade talks could help, he said.

“It is important to ensure a more rational and balanced outcome of the Doha Round negotiations at an early date and make the global market more open,” he said.

Reporting by Tamora Vidaillet and Clara Ferreira Marques; Editing by Hans Peters