China isn’t changing its economic policies for 2010, but it looks as though it is giving itself the room to make subtle changes to handle a different growth outlook next year than it had to face in 2009.

According to reports on Chinese news websites over the weekend, the Chinese government will stick with the current “proactive fiscal policy and moderately easy monetary policy” in 2010, according to its supreme policy-making body, the the Political Bureau of the Communist Party of China (CPC) Central Committee.

“We will maintain the continuity and stability of the macro-economic policy,” Xinhua News Agency said, quoting the Political Bureau of the Communist Party of China (CPC) Central Committee. The newsagency reports pointed out the bureau has chaired by President Hu Jintao, to make sure everyone understood just who was driving the policy.

This policy will now be implemented by bodies such as the central bank, The State Council, The People’s Bank Of China, the National Development Reform Commission, the Ministry of Finance and The Ministry of Commerce. It will be formally adopted at a meeting of the People’s Congress early in 2010.

That means those commentators claiming that bubbling asset values and high inflation would force China to slash spending next year, are wrong.

All this has the feeling of choreographed by the Communist Party. It was a year ago that China revealed its $US585 billion stimulus package in the depths of the post-Lehman Brothers collapse, and many Western commentators said it wouldn’t work, would cause inflation, asset bubbles or some other great calamity. A year on and China’s economy has rebounded strongly, with no inflation and no sign of an asset bubble.

It was a most difficult year and China’s economy has rebounded (helped by frenetic lending and investment) in a way that has supported the entire Asian region, including Australia.

The US and Europe remain stuck in a wobbly recovery, with unemployment high and bank lending weak to non-existent, and markets outstripping reality.

That’s not to say that there won’t be problems next year, there could be if the November 2008 policy is followed unchanged. It’s very probable China will cut spending next year in some areas, but redirect that to other sectors, especially trying to stimulate domestic consumption.

The Political Bureau meeting, chaired by President  (and CPC Central Committee General Secretary) Hu Jintao, on Friday used the exact wording — “active fiscal policy and relatively loose monetary setting” — which it adopted a year ago for its pro-growth policy.

There was no mention of the value of the Yuan in the statement: that’s the touchiest question for the government at the moment.

Instead of just more heavy spending on investment, the statement attempts to push the idea that China will switch to promoting consumption. Friday’s statement contains enough qualifications to allow that to happen.

That was a policy line supported by a later statement from Ministry of Commerce, which said retail sales would be accelerated in 2010 so that consumption can make a bigger contribution to growth.

The announcement is supposed to set the tone for the upcoming central economic work meeting, where next years’ economic growth policies will be decided. The message from the meeting was that China would not adopt an exit strategy from its stimulus package now. Instead, the policies would be “adjusted” according to the demand of different sectors.

More efforts would be made to improve the quality and efficiency of economic growth, to promote the transformation of the economic development pattern and structural adjustments, according to the statement released after the meeting.

But there’s a bit of wriggle room for the government and policymakers.

According to the reports on Xinhua and in the China Daily paper, the Political Bureau said in its statement that it would “enhance the focus and flexibility of economic policy in the following year according to new situations. It would also further implement and enrich the economic stimulus package to make the economy grow in a more stable, balanced and sustainable way.”

That seems to be giving it room to cut spending, cut credit, perhaps lift interest rates or tighten monetary policy by other means (such as increasing the assert reserve ratios the bank must hold). It could even be read as giving the government room to make the currency more flexible.

The statement from the Political Bureau said that more efforts would be made to promote reform, opening up and innovation, improve people’s livelihood and maintain social stability and enhance the vigor and momentum of economic growth.

And next year would see the government would improve policies to spur consumption and ensure investment grow at a reasonable pace in other words, the government aims to boost domestic demand, especially a sustainable increase in consumption.

And media reports from Chinese government department have started fleshing out the statement, with the most interesting being the Ministry for Commerce, which said on Saturday that China will strive for a higher growth rate for retail sales in 2010 with a bigger contribution to next year’s growth in GDP.

“According to comments from Jiang Zengwei, vice-minister of commerce, at a forum in Beijing The ministry will take measures to boost both rural and urban consumption next year.

“He said the MOC will expand the ‘old-for-new’ program to encourage more consumers to buy new cars and home appliances on a basis of discount if they give up their old ones to sellers. Credit consumption and sales promotion, especially those during holidays, will also be encouraged.

“China’s retail sales grew by 16.2% in the 10 months to October and there are forecasts this could rise to a rate of 18.2% next year.”

As I said all arranged and scripted by the Chinese Communist Party, but so then has the economic recovery in China over the past 12 months, to the continuing surprise of many Western commentators.