China’s Communist Party leadership vowed to step up targeted controls to counter downward pressure on the economy, avoiding any mention of full-blown stimulus.
China’s economic growth in the first quarter conformed to expectations, the official Xinhua News Agency reported, citing a Politburo meeting on Thursday at which President Xi Jinping presided. China will “fine tune” its policies and maintain continuity and stability, Xinhua said.
Economic growth slowed to 7 percent in the first quarter, dragged down by a sluggish property market and excess capacity. Premier Li Keqiang’s government is encouraging long-term investment and cutting government intervention amid reforms to increase the role of markets.
“China will continue loosening policies to help growth,” said Zhao Yang, the Hong Kong-based chief China economist at Nomura Holdings Inc. “But it won’t go further to the crisis-mode stimulus as we’ve witnessed in 2009.”
The People’s Bank of China has cut benchmark interest rates twice in the last six months. This month, it cut banks’ required reserve ratios by 100 basis points, the deepest since 2008 when China was hit by the global financial crisis.
These measures have achieved some results in stabilizing growth, Zhao said. “It’s very possible that China has recorded a slight month-on-month pickup in economic activity in April,” he said.
China will release the official manufacturing purchasing manager index at 9 a.m. Friday. The gauge may have eased to 50 from March’s 50.1, according to a Bloomberg survey of economists.
“In a prudent monetary policy, the intensity should be proper, and channels between monetary policy operations and economic activities on the ground must be kept clear,” the Central Committee said in its statement.
The meeting also approved a plan to coordinate development in Beijing, the surrounding region of Hebei and the city of Tianjin. The focus will be on making Beijing less crowded and improving the environment in and around China’s capital.
— With assistance by Xin Zhou