China's ruling Communist Party leadership will implement prudent monetary policy and proactive fiscal policy in 2012, the official Xinhua news agency reported on Monday, reiterating the basic policy tone Beijing set at the end of last year.

The Politburo, China's nine-member top decision-making body,

also said that policies could be adjusted to make them more targeted, flexible and forward-looking.

The announcement was made at a meeting chaired by President Hu Jintao to discuss a draft report to be submitted to the country's top legislature's annual meeting, which is scheduled for March.

It also said that the central government would strike a balance between maintaining economic growth, adjusting economic structures and managing inflation expectations this year, while also making efforts to boost domestic consumption.

China's central bank cut the amount of cash banks must hold in reserves on Saturday in a bid to crank up credit creation as the world's second-largest economy faces a fifth successive quarter of slowing growth.

(Reporting by Aileen Wang and Don Durfee; Editing by Kim Coghill)