following a Politburo meeting chaired by President Xi Jinping. "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.
But top leaders cautioned that the recovery is not strong enough and the country faces new obstacles upgrading and transforming it 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," said Zhiwei Zhang, chief economist at Pinpoint Asset Management. China's economy grew at a faster-than-expected pace in the first quarter, as businesses and consumers were freed from strict COVID curbs that had hobbled economic activity, but there are still headwinds and the recovery remains uneven.
UNEVEN RECOVERY
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 in order to boost
services consumption, while private investment should be
encouraged.
The world's second-biggest economy has struggled to fully
recover despite the lifting of tough COVID restrictions in
December, as a tepid recovery in the property market, local debt
risks and slowing global growth have dented confidence and
overall demand.
China will expand employment channels for college graduates
and stabilise 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 development of enterprises, the Politburo said.
The Communist Party signalled upcoming reforms by approving
guidance last week to promote the development of private firms,
which account for half of the tax revenue, over 60% of output
and provide 80% 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 developers deliver.
(Reporting by Ellen Zhang, Kevin Yao and Beijing Newsroom;
Editing by Shri Navaratnam & Simon Cameron-Moore)
