BEIJING (MNI) - China will maintain the government's "appropriately loose" monetary policy and expansionary fiscal policy in 2010 but indicated that those stances could be fine tuned as the situation changes, according to reports of a Chinese Communist Party meeting held Friday.

The reports were carried by the official Xinhua News Agency and state television and followed a meeting of the Political Bureau of the Party's Central Committee about next year's economic work.

The Central Economic Work Meeting, an upcoming gathering of senior government leaders to set policies, is expected to arrive at the same conclusion, though Beijing is widely-expected to gradually tighten policy starting in the new year.

Hints of that approach to policy-making were carried in a report of the meeting posted on the website of China Central Television (CCTV), which also said that the Party has decided to "keep the basic direction of macro-economic policy next year."

"We will make all efforts to increase the flexibility of policy according to new situations," it added.

The Politburo also concluded that the government will move to boost domestic demand in the new year, particularly consumer demand.

It will also implement policies designed to encourage the private sector to invest, CCTV said, as well as working to stabilize its policy approach towards the external sector "to promote a stable increase of foreign trade and actively expand imports."

Xinhua said earlier that "China will maintain the stability and continuity of its macroeconomic policies and stick to its expansionary fiscal policy and appropriately loose monetary policy."

The Communist Party meeting was chaired by Hu Jintao, the President of China and General-Secretary of the CCP's Central Committee.

The government's monetary and fiscal policy stances were adopted in November 2008 in the face of the global financial crisis. An October 21 release from the State Council, the cabinet body, indicated that the government has moved off its crisis footing and is now focusing on managing inflation expectations.

That release has led to a standoff in the domestic bond market, with investors unwilling to buy large amounts of sterilization paper issued by the People's Bank of China at current yields because they expect interbank rates to rise as monetary policy tightens gradually.

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