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In a
rare acknowledgement of the challenges ahead, state radio quoted
the decision-making body of the Communist Party as saying that
China had yet to find new drivers to power its economy at a time
when old engines are flagging.
To ensure that the economy can sustain a "reasonable" pace of
growth, the Politburo reiterated the government's line that it
would keep economic policies broadly stable, while increasing
targeted adjustments.
Chinese policymakers have in the past two years described any
loosening in fiscal and monetary policy, including reductions in
interest rates, as "targeted".
Fiscal policy would be "pro-active" and liquidity kept at an
"appropriate" level, state radio quoted the Politburo as saying.
There was no reference to the rout in China's stock market
<.CSI300> <.SSEC>, which plunged 8 percent on Monday after a
recent meltdown that wiped out as much as a third of share value
at the height of the selloff.
Buffeted by a slowing property market, cooling investment growth
and unsteady local and foreign demand, China's economy has
stumbled in the past two years and is widely expected to clock
its worst performance in a quarter of a century this year.
Analysts polled by Reuters earlier this month forecast that
China's economy will grow 7 percent this year, an enviable rate
by global standards and bang in line with the government's
target, but the slackest rate in 25 years nonetheless.
Most analysts believe China has to further loosen monetary
policy if it wants to generate 7 percent growth.
The analysts, polled by Reuters, expect China to reduce interest
rates by another 25 basis points this year, and lower the amount
of deposits that banks must hold as reserves by a further 100
basis points.
(Reporting by Koh Gui Qing, Winni Zhou and Beijing Newsroom;
Editing by Nick Macfie)
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