BEIJING: China’s economy is on track for a steady rebound in the remainder of the year and its annual growth target of around 5 percent is achievable, backed by a solid first-half performance and robust policy support from the country’s economic decision-makers, said economists and global executives.
Looking ahead, economists said that policymakers will likely strengthen countercyclical adjustments with a stronger mix of fiscal and monetary measures to shore up domestic demand and cushion the impact from a more complicated external environment. Measures in the pipeline may include expanding fiscal spending to spur consumption, further reductions in the reserve requirement ratio and interest rate cuts, as well as targeted support for exporters and workers hit by external shocks, they said.
Their remarks came after a meeting of the Political Bureau of the Communist Party of China Central Committee, which was presided over by Xi Jinping, general secretary of the CPC Central Committee, shed light on the economic priorities for the second half.
The key meeting, held in late July, called for solid efforts in economic work in the second half of the year, with a focus on stabilizing employment, businesses, markets and expectations, and effectively promoting the positive interplay between domestic and international economic flows.
Macro policies should be continuously strengthened and intensified in a timely manner, the meeting said, stressing the implementation and refinement of a more proactive fiscal policy and a moderately loose monetary policy. “China’s economic activity has remained stable with limited volatility, so the main policy focus should be on implementing existing fiscal, monetary and financial measures,” said Luo Zhiheng, chief economist at Yuekai Securities.
“The strength and timing of additional support will depend on new developments in the second half of the year.”
China’s second-quarter GDP grew 5.2 percent year-on-year despite headwinds from US tariff hikes, marking the third consecutive quarter of growth above 5 percent, official data showed.
Luo said the recent high-profile meeting’s policy signals, such as “stepping up policy efforts when appropriate” and “enhancing flexibility and foresight”, mean that while the current fiscal and monetary policies should continue to stabilize market expectations, policymakers will also make flexible adjustments based on evolving conditions, such as rolling out new incremental measures and strengthening countercyclical adjustments.
“A wide range of policy tools remains available for deployment,” he added. “It is advisable for the government to adjust fiscal budgets with forceful spending, provide timely relief for hard-hit sectors such as foreign trade, offer subsidies for people in difficulty, and expand the scope of trade-in deals to cover services consumption.”
Prior to the Political Bureau meeting, the CPC Central Committee held a symposium in July with non-CPC personages to solicit opinions and suggestions on the current economic situation and the economic work for the second half.
While presiding over the symposium, Xi noted that the country’s economy still faces many risks and challenges. He underscored the need to properly understand the situation, enhance the awareness of potential dangers, think about the worst-case scenario, and make good use of development opportunities, potential and advantages to consolidate and expand the positive momentum of economic recovery and improvement.
Huang Hanquan, head of the Chinese Academy of Macroeconomic Research, said the government must capitalize on the current window of opportunity, when the economy and social expectations are relatively stable, to prepare reserves of a group of incremental policies to ensure sustained growth for the remainder of the year. –The Daily Mail-China Daily news exchange item
