A State Grid employee works on an ultra-high-voltage transmission construction in Huainan, Anhui province. [Photo by Song Weixing / For China Daily]
Regulator vows pre-emptive measures to meet annual target of around 6.5%
China will keep its economic growth within a reasonable range in the year's second half, and will ensure that its full-year growth target is achieved despite the ongoing China-US trade disputes and the country's debt-reduction initiatives, according to the nation's top economic regulator.
Given rising challenges that might put higher pressure on economic growth, the government will take more pre-emptive measures to meet growth target set at the start of this year, said Cong Liang, a spokesman for the National Development and Reform Commission, on Wednesday.
In the first six months, the economy had year-on-year GDP growth of 6.8 percent, remaining comfortably above the annual target of around 6.5 percent set early this year.
But headwinds remain as China faces growing challenges, the economy adopts a more consumption-led growth model and trade tensions with the United States weigh on exports and employment in affected industries.
Slower month-on-month growth of some key indicators in July, such as investment and retail sales, have caused concern about economic resilience.
"Trade frictions have had a limited impact on the economy so far. We have the capability and confidence to achieve the annual growth target," said Cong, quelling concerns about significant cooling in coming months.
The government will issue more policies to support the economy, while controlling the pace of deleveraging and improving credit use efficiency, Cong said.
Fan Ruoying, an analyst with the research institute of the Bank of China, said there were some signs of increasing credit growth in July, but financial market funds have yet to reach nonfinancial sectors to support the real economy.
"There are some policy lags. The most urgent task is to improve the monetary policy transmission mechanism and solve the private sector's financing problems," she said.
The People's Bank of China, the central bank, said China's new yuan loans in July recovered from tepid growth earlier this year. The growth of the broad money supply, or M2, rebounded to a five-month high.
"Liquidity in the market is abundant," said a government official with knowledge of the matter who declined to be named.
"Stabilizing investment will play a key role in the short term, and more priority will be given to infrastructure spending. As a result, more of the funds raised through issuing local government bonds, which may become faster in the short term, will be earmarked for infrastructure," the official said, explaining investment policy orientation for the second half.
The comments were consistent with a guideline released by the Ministry of Finance on Tuesday, in which local governments are required to speed up issuance of special bonds to fund infrastructure projects.
Jiang Chao, chief economist of Haitong International Securities, wrote in a research note that infrastructure spending is expected to recover in the second half thanks to measures policymakers recently rolled out.