China urged to keep policies flexible

Beijing also needs to guard against sudden capital inflows from investors seeking higher returns should developed economies,including the United States,not recover well and keep interest rates low,he added.

“Macro economic policies are short-term policies and need to change when conditions change,” Fan told a forum.

“Situations will shift very swiftly,including asset prices and hot money inflows. My personal view is that a flexible macro policy is an important factor in keeping economic stability,” he said.

Beijing has repeatedly pledged that it will stick to its fiscal stimulus and appropriately loose monetary stance,but it has also said that it will enhance the flexibility of its policies next year,which many analysts see as a signal of its intention to begin mild tightening.

It has already started reining in its ultra-loose policies,including saying that it will more strictly control bank lending.

Fan said the Chinese economy would grow 8-9 per cent in 2010,peaking at roughly 11 per cent year-on-year growth in the first quarter.