China to maintain current macro policy in 2010

China will maintain current stimulus policies to prop up economic growth in 2010 despite fears of overcapacity and asset bubbles, state media reported. The Political Bureau of the Communist Party of China Central Committee said the country will "continue the proactive fiscal policy and moderately easy monetary policy next year." Economists and analysts have been pushing for Beijing to map out a stimulus "exit strategy" over concerns that government-backed spending could have more serious implications on the longer-term health of the economy. Yu Yongding, a former adviser to the central bank, said in a widely reported speech last week that expansionary fiscal and monetary policies have helped maintain growth but the "medium and long-term effects of the expansionary policies, including overcapacity and a decline in investment efficiency, are worrying." The economy grew 8.9% year-on-year in the third quarter and is on track to meet the government’s full-year target growth of 8%. The Politburo said it would "enhance the focus and flexibility of economic policy in the following year according to new situations."