Top leaders gathered in Beijing yesterday to determine economic policies for next year amid efforts to prevent the economy from overheating and to curb inflation.

The Central Economic Work Conference, an annual event initiated more than a decade ago, serves as a crucial mechanism for the Communist Party of China (CPC) Central Committee and the State Council to run the economy.

The conference will work out strategies and resolutions for problems in economic development. On the agenda is how to cool booming investment and bank lending, address the soaring trade surplus, and improve people's living conditions, sources said.

The country's main inflation benchmark, the consumer price index, was at a decade-high 6.5 percent in October, driven largely by surging food prices.

Real estate prices have also soared but share prices have fallen back in recent weeks after more than doubling since the beginning of the year, helping reduce fears of a stock price bubble.

The economy is expected to expand 11.5 percent this year, fueled mainly by investment spending which rose 26.9 percent in the first 10 months.

Foreign exchange reserves topped US$1.43 trillion by the end of September - a key factor that has triggered persistent liquidity problems.

Due to rising prices of food, the inflation rate will be 4.5-4.6 percent for the full year, compared with the government's target of 3 percent, top statistician Xie Fuzhan said last week.

Meanwhile, a government think tank issued a report forecasting economic growth in 2008 at 10.8 percent.

The estimate by the State Information Center, published in the China Securities Journal yesterday, is in line with World Bank and private economists' forecasts.

The forecast put inflation for 2008 at 4.5 percent.

In a prelude to the conference, the Political Bureau of the CPC Central Committee convened a meeting last week, saying next year's top macroeconomic priorities would be preventing the economy from overheating and price rises from evolving into "entrenched inflation".

"China will seek steady progress, give priority to good development (over excessive development) and adhere to the reform and opening-up policy," the Political Bureau was told.

The country will also strive to make greater progress in improving people's livelihoods, especially low-income families.

National Development and Reform Commission Minister Ma Kai said over the weekend that the country would adopt a tight monetary policy - compared to the "moderately tight" policy in the previous few years - while continuing a prudent fiscal policy.

Ma made the remarks at the first high-profile economic dialogue between China and Japan held on Saturday in Beijing.

Also at the dialogue, Finance Minister Xie Xuren said the country would make use of various monetary instruments to tighten credit control.

The central bank has this year raised the reserve requirement ratio for commercial banks nine times and interest rates five times - and observers reckon a sixth rate hike is around the corner.

(China Daily December 4, 2007)