China to keep tight property rules in 2012

Chinese leaders have vowed to maintain property market restrictions in 2012 to bring housing prices back down to a "reasonable level", the official Xinhua news agency said Wednesday. The Central Economic Work Meeting, an annual gathering of Chinese leaders to decide economic policy for the next year, also agreed to maintain a "prudent monetary policy" and "guarantee steady growth", Xinhua said. The closed-door meeting in Beijing -- the last before a once-in-a-decade leadership transition begins next year -- was held against a backdrop of turmoil in China's biggest export markets of Europe and the United States. The main theme for the next 12 months will be "making progress while maintaining stability", Xinhua said, citing a statement issued after the three-day meeting finished. "China will ensure that macroeconomic regulation policies and overall consumer prices remain basically stable and will guarantee the steady growth of the economy and maintain social stability," it said. Beijing will also "unswervingly maintain its regulation policies on the property market next year to make housing prices return to a reasonable level." Policymakers also vowed to maintain a "basically stable" yuan exchange rate, which could put further downward pressure on the currency as investors bet against a strong appreciation next year. The yuan has been under the biggest selling pressure since the 2008 global financial crisis as slowing domestic growth and overseas woes fuel demand for the US dollar. The statement is a strong sign Beijing will move cautiously to ease tight credit restrictions put in place in the past two years to curb surging inflation and housing prices. Chinese leaders are anxious to prevent a sharp slowdown in the world's second largest economy but at the same time they want to avoid reigniting inflation which has the potential to trigger social unrest. The export-dependent country has seen demand for its products shrink in recent months as consumers from Paris to New York cut back on spending due to an increasingly bleak economic outlook. Consumer prices rose at their weakest pace in more than a year in November and industrial output growth hit its lowest level in more than two years, according to official data released Friday. Manufacturing activity also contracted in November for the first time in 33 months, fuelling concerns the economy is at risk of a hard landing. Late last month Beijing cut the amount of money banks must hold in reserve for the first time in three years to spur lending and counter turmoil in Europe and the United States that threatens to derail China's economy. Chinese media said Monday policymakers at the meeting must be prepared to deal with a "weakening domestic economy and volatile external environment" and "take prompt action" if necessary next year. Vice President Xi Jinping is widely expected to replace Hu Jintao as party head next year, becoming president in March 2013, while Vice Premier Li Keqiang is in line to take over from Wen Jiabao.