China is to maintain support for the economy, focusing on domestic demand which remains inadequate, the Chinese Communist Party Politburo said yesterday, Xinhua news agency reported.
The triple pressures facing the economy — shrinking demand, supply shocks and weakening expectations — have eased amid better-than-expected first-quarter growth, Xinhua reported following a politburo meeting chaired by Chinese President Xi Jinping (習近平).
“Market demand has gradually recovered, economic development has shown an upward trend and the economic operation has achieved a good start,” Xinhua said, citing the Politburo.
However, top leaders cautioned that the recovery is not strong enough and the nation faces new obstacles upgrading and transforming its economy.
“The current improvement in China’s economic performance is mainly restorative, with weak momentum and insufficient demand,” the politburo said. “Restoring and expanding demand is the key to the sustained recovery and improvement of the current economy.”
Proactive fiscal policy should be stepped up and work alongside monetary policy to boost demand, the politburo said, reaffirming the current stance.
“The politburo meeting shows the government will likely keep the supportive fiscal and monetary policy stance in the second quarter,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) said.
China’s economy grew at a faster-than-expected pace in the first quarter, as businesses and consumers were freed from strict COVID-19 curbs that had hobbled economic activity, but there are still headwinds and the recovery remains uneven.
As pockets of weakness remain and a full-blown economic recovery appears some way off, the politburo said urban and rural household income should be increased to boost services consumption, while private investment should be encouraged.
The world’s second-biggest economy has struggled to fully recover, despite lifting tough COVID-19 restrictions in December last year, as a tepid recovery in the property market, local debt risks and slowing global growth have dented confidence and overall demand.
China would expand employment channels for college graduates and stabilize jobs for migrant workers, the politburo said.
The government would also reinforce confidence among businesses, guide state investment, stimulate private investment and attract foreign investment, it added.
Legal and regulatory reforms would be made to encourage fair competition and the development of enterprises, the politburo said.
The Chinese Communist Party signaled upcoming reforms by last week approving guidance to promote the development of private firms, which account for half of tax revenue, more than 60 percent of output and provide 80 percent of urban employment.
China should attach great importance to development of general artificial intelligence, create an innovation ecology and fend off risks, the politburo said.
The politburo also reiterated its policy to support demand for improved housing and ensure property developers deliver.
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