China’s top policymakers meet once a year to decide economic policies. The most recent economic work conference (EWC) ended December 7, and the group points to another good year for the Chinese economy in 2010.

For starters, the EWC announced that macro policy will remain fairly accommodative. At the same time, credit growth won’t be allowed to run as wildly as it did this year. That being said, credit growth should still be in the double digits, providing sufficient cushion. If exports pick up, one would expect the authorities direct banks to cut back on lending to avoid runaway inflation.

The committee also stressed its desire to support urbanization and structural changes that will promote domestic consumption. The latter remains the ultimate goal of the Chinese leadership, and the change is gradually taking place.

Thus the government will probably maintain the tax subsidies on home appliances and automobiles in the rural areas, while the Chinese version of “cash for clunkers” should also remain intact. Furthermore, expect the government to continue to support the housing sector, especially the non-luxury segment of the market that caters to the average person. The government will also continue to increase pension and income subsidies to the poor.

Wage increases are also on the table—another potential catalyst for domestic consumption and a clear indicator that China is trying to take its economy to the next level of the economic food chain and away from low-end manufacturing.

To that end, the EWC emphasized the big potential of developing “new strategic industries” in China, with state support. Given the country’s goals this should mean more investment in advanced machinery, technology and energy industries–among others.

At the same time, the Chinese authorities continue to steer consolidation in other industries in an effort to create the economies of scale and competitive edge that accrue to larger corporations. This aligns with the leadership’s long-stated goal of diversifying export product lines and destinations for Chinese exports.

The authorities also paid special attention to the potentially higher energy prices in China, a move that would bring about more rational and efficient energy consumption. As a result, energy and utility prices will continue to gradually increase, especially gas prices.

Note that China has a respectable amount of life in its gas reserves (about 32 years’ worth), and has added more in recent years through a streak of successful explorations. That being said, China continues to import gas for strategic reserves purposes. 

China should lead Asian economies into the New Year and grow 9 to 10 percent while enjoying relatively low inflation.

I continue to be bullish on names that will benefit from an uptick in private consumption as well as industries that will be supported by elevated liquidity levels.

Two of the companies investors should consider are China Life Insurance (NYSE: LFC), and shoemaker Belle International (HK: 1880, OTC: BELLF), both long-term holdings in the Silk Road Investor’s portfolio.

China Life is the nation’s largest life insurer in terms of premiums and geographic footprint. It has a policy base of more than 250 million people and controls 40.3 percent of the market; the top three players in the industry control 63 percent of the market.

Belle International is the leading ladies’ footwear retailer in China. It offers a wide range of footwear brands, six of which are self-owned. Recent acquisitions have expanded the company’s portfolio to include local brands for men’s shoes, ladies footwear, and higher-end licensed international brands such as Clarks, Geox, Hush Puppies, and BCBG. Belle is also one of the largest sportswear retailers in China and the No. 1 and No. 2 distributor for Adidas and Nike, respectively.