Source: Xinhua

12-08-2008 18:27

China will adopt an "active" fiscal policy and a "moderately easy" monetary policy to boost its economy, according to an executive meeting of the State Council, or cabinet, on Sunday.

These stances mark a shift from "prudent" fiscal and "tight" monetary policies the government adopted at the start of 2008. And they are one of only a few major policy shifts in the past three decades.

Before Sunday, China had made six major macro-economic policy shifts over the 30 years since the era of reform and opening up began in 1978:

-- From 1979 to 1981, China moved to cool an overheated economy and inflation resulting from investment booms since 1978. The government lowered economic targets, curtailed spending, tightened credit controls and froze corporate savings through administrative means.

-- From 1985 to 1986, China adopted tight fiscal and monetary policies after economic growth surged 15.2 percent in 1984 on strong investment. It was the first time the government tried to use fiscal and monetary policies in macro-controls, which included curbing bank lending and money supply.

-- From 1989 to 1990, runaway price rises and heady investment growth led to a series of strong actions by the government, which imposed price caps on major industrial inputs, reduced expenditure, strictly controlled credit and at one point even halted lending to township enterprises. As a result, economic growth plummeted to 3.8 percent in 1990 from 11.3 percent in 1988.