China rolls out measures to boost economic recovery, confidence

* China's economic recovery continues apace despite challenges at home and abroad, and the country is extending support measures to boost confidence, ensure sustained recovery and promote high-quality development.

* The country has announced a slew of policy pledges, targeting specific sectors ranging from consumption, private economy, and property market, to capital market and forex market, which are well-aligned and consistent with each other.

* With the effect of the supportive measures gradually playing out, the economy will maintain its stable and sound trend in the second half of this year, said an official of the country's top economic planner.

BEIJING -- Despite challenges at home and abroad, China's economic recovery continues apace, and the country is extending support measures to boost confidence, ensure sustained recovery and promote high-quality development.

A slew of policy pledges, targeting specific sectors ranging from consumption, private economy, and property market, to capital market and forex market, have been made public after a key meeting of the top leadership vowed to strengthen counter-cyclical regulation and make more policy options available.

At a press conference Friday, National Development and Reform Commission (NDRC) official Yuan Da said the country would mull a raft of policy options that are stronger and more targeted, and take action in response to changes in situations.

To encourage consumption, which the government said plays a fundamental role in driving economic growth, the NDRC released a 20-point plan this week to spur consumer spending on a wide range of goods and services, including new energy vehicles, home appliances, electronics, catering, and tourism.

The top economic planner urged local authorities to ban new restrictive measures on auto purchasing while improving those that have already been in place.

This photo taken on Feb. 15, 2023 shows a factory of Chinese electric vehicle (EV) maker Li Auto Inc. in Changzhou, east China's Jiangsu Province. [Xinhua/Li Bo]

NDRC also unveiled 28 policy measures to support the private economy, including encouraging private investment in major national projects and enhancing financial support to the sector that contributes to a majority of the country's urban jobs.

For the property sector, a pillar of the country's economy, the authorities demanded timely adjustment and improvement of policies in the sector in response to the new situation, stating that "major changes have taken place in the relationship between supply and demand in China's real estate market."

Ni Hong, minister of Housing and Urban-Rural Development, said at a recent symposium with the country's real-estate developers that effective policy steps, such as reducing down payment ratios for first-time homebuyers, lowering mortgage rates and easing purchase restrictions for people wanting to buy a second house, will be firmly implemented.

On the financial front, the Ministry of Finance and the State Taxation Administration unveiled a package of tax relief measures to support small businesses, tech startups, and rural households.

These pro-growth policies, covering a wide range of areas, are well-aligned and consistent with each other. This round of policies highlighted policymakers' determination to stabilize growth, investment bank CICC said in a report to clients.

Staff members perform quality check on medical injections at a workshop in Rizhao Hi-Tech Industrial Development Zone of Rizhao City, east China's Shandong Province, June 29, 2023. [Xinhua/Guo Xulei]

Amid global headwinds, China's economy expanded 6.3 percent in the second quarter of the year, accelerating from 4.5 percent in the previous quarter. It grew 5.5 percent in the first half of the year, above the government's target of around 5 percent set for 2023.

Besides improvement in the headline GDP data, a breakdown also showed optimization in economic drivers, with final consumption contributing to 77.2 percent of economic growth in the first half.

The readings came after various international institutions revised their forecasts for China's economic growth this year. In June, the World Bank raised its China growth forecast to 5.6 percent from January's projection of 4.3 percent, while the Organization for Economic Co-operation and Development (OECD) lifted China's growth expectation to 5.4 percent from 5.3 percent it forecast in March.

On Monday, the purchasing managers' index for the manufacturing sector, a key measure of China's factory activity, came in at 49.3 in July, up from 49 in June and 48.8 in May, adding to the evidence of stable recovery in the world's second-largest economy.

The continued recovery and supportive measures are helping boost business confidence. A survey by the American Chamber of Commerce in South China pointed to growing optimism, as more than 90 percent of the participating companies had partially or fully recovered from the pandemic, while 57 percent of them stayed optimistic about the Chinese market, up 4 percent compared with a survey result released in late February.

Top leaders believed the Chinese economy's long-term sound fundamentals remain unchanged, but warned of new difficulties and challenges that mainly arise from insufficient domestic demand, difficulties in the operation of some enterprises, risks and hidden dangers in key areas, as well as a grim and complex external environment.

Tourists visit the Youzhou ancient town in Youyang Tujia and Miao Autonomous County, southwest China's Chongqing Municipality, May 1, 2023. [Xinhua/Chen Bisheng]

There were twists and turns in the second quarter, but those would not reverse the trend of China's economic recovery, said Wang Qing, an analyst at Golden Credit Rating.

Wang expected policymakers to unveil more supportive measures in a progressive and moderate manner in the second half of the year.

At Friday's press conference, Zou Lan, an official with the People's Bank of China, the central bank, said the country has ample policy space and sufficient policy tools and has the confidence, condition, and capability to deal with various risks.

Gao Ruidong, chief economist at Everbright Securities, expected the country's fiscal policy to be more proactive by stepping up the issuance of special local government bonds as well as the use of policy-based and developmental financial instruments in the third quarter to boost investment in infrastructure.

Yuan Da said with the effect of the supportive measures gradually playing out, the economy will maintain its stable and sound trend in the second half of this year, following a sustained recovery in the January-June period.

Video reporters: Sun Qing, You Zhixin, Huang Haoming, Guo Yifan, Lin Fanshi, Li Yan, Lu Haiyue; Video editors: Hong Ling, Li Qin, Zhang Qiru