China's top leaders opened a three-day meeting on Monday to set out the country's economic priorities for 2012, the last before a once-in-a-decade leadership transition begins next year.

The annual closed-door meeting in Beijing will decide policy for the year ahead against a backdrop of turmoil in Europe and the United States, key export markets for the world's second-largest economy.

The Central Economic Work Meeting, which sets monetary policy, opened Monday and will end on Wednesday, the government announced on its main news website.

It comes after China's ruling Communist party said Friday the nation would implement a "prudent" monetary policy in 2012, signalling that Beijing will move cautiously as it eases credit restrictions to prevent a sharp slowdown.

China 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 contracted in November for the first time in 33 months, fuelling concerns the economy was at risk of a hard landing.

Until recently, policymakers have been reluctant to relax tight credit restrictions implemented in the past two years amid fear of reigniting inflation, which peaked at a more than three-year high of 6.5 percent in July.

But 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.

The Central Economic Work Meeting is the last major economic policy gathering before President Hu Jintao and Premier Wen Jiabao step down from their party posts late next year.

Vice President Xi Jinping is widely expected to replace Hu as party head and later become president in March 2013, while Vice Premier Li Keqiang is in line to take over from Wen, putting him in charge of economic matters.