China's policy focus 'set to shift'

BEIJING - Inflation might yield to growth as the top issue on China's economic agenda next year, with a more relaxed policy environment and further tax cuts on the way, experts said ahead of the top economic conference, which is expected to convene soon.

Analysts called for more efforts to offset the impact of the European debt crisis and maintain domestic financial stability

"Tackling inflation has been off the table for the central bank", as is clearly shown by the recent cut in the reserve requirement ratio, said Yuan Gangming, a senior researcher with the Center for China in the World Economy at Tsinghua University.

"One of the major tasks for the next year should be to provide a reasonable money supply to maintain the momentum of economic growth," Yuan said, adding that "targeted easing" policies aren't enough to quench businesses' thirst for credit.

The comments came ahead of the Central Economic Work Conference, which will set the tone for China's economic policies next year.

The authorities have yet to announce any timetable for the top meeting.

Last year's conference made tackling surging prices the top priority for 2011, but there have been signs of a policy shift as inflation eases and the manufacturing sector experiences setbacks caused by tightening policies and weak external demand.

China's inflation could fall to about 4 percent in December, from a more than three-year high of 6.5 percent, said a UBS Securities Asia Ltd research note. It will fall to about 3.5 percent in 2012, it said.