China’s top leadership vowed on Thursday to use targeted policies to combat the “relatively big” downward pressure on its economy, China’s state-run Xinhua news agency reports.
The Politburo, China’s top decision-making body, said that the nation will keep its macro policies stable, make “pre-emptive adjustments”, and fine-tune economic policies in a timely manner in order to support the economy.
“China will continue to keep the continuity and stability of macro-policies… to maintain economic operations within a reasonable range,” according to a statement released following a meeting of the Political Bureau of the Communist Party of the China Central Committee, which was chaired by President Xi Jinping.
The meeting called for heightened attention to combat downward pressure while preventing and dissolving any systematic risks.
China’s top officials pledged to take “effective measures” to ensure the steady growth of consumption, investment and exports, which are the key engines driving economic expansion.
While pushing ahead with economic restructuring, authorities need to be more prepared and act quickly in order to control risks, the statement said.
China will maintain its proactive fiscal policy by continuing to expand public spending, reduce companies’ burdens and encourage private investment, while keeping its prudent monetary policy “elastic”, according to the statement.
Reforms will be critical to restructuring China’s economy, it said, putting the focus on state-owned enterprises, taxation, as well as the financial industry.
Although China’s economic growth was in line with expectations in the first half of the year, its economy must still find new growth momentum as traditional drivers weaken, the statement said.
China’s growth has suffered in a combination of an industrial slowdown, a weak housing market, and local debt which has added to increased pressure on authorities to do more to meet Premier Li Keqiang’s 2015 growth target of “about 7 percent“.
A recent stock market crash in China that wiped out close to $4 trillion has also underscored the risks that remain even after policy makers ramped up support in recent months.
China’s economic growth in the first quarter (Q1) of 2015 reached the slowest quarterly pace in six years at 7 percent from a year earlier, this was followed by the same growth rate in the second quarter (Q2) which beat economists’ estimates for 6.8 percent growth.
A recent private gauge showed that Chinese manufacturing unexpectedly fell sharp in July to the lowest in 15 months, which has further reinforced the need for additional policy support.
China’s preliminary (or “flash”) General Manufacturing Purchasing Managers’ Index (PMI) from Caixin and Markit Economics, previously known as the HSBC PMI, fell to 48.2 in July, down from 49.4 in June and worse than all 16 forecasts in a Bloomberg survey, where the median estimate was for an increase to 49.7. A reading below 50 indicates a contraction.
The decline in China’s preliminary July manufacturing gauge contrasts from the better-than-expected economic growth growth rate last quarter.
China’s final July PMI data will be released on August 3.
A full-year growth rate of 7 percent would be its slowest annual rate of expansion in 25 years.