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More policy fine-tuning expected

By Song Shengxia  (Global Times)

08:21, July 17, 2012

While government is unlikely to unveil aggressive stimulus policies at its upcoming mid-year economic conference, which is expected to be convened as early as Wednesday, the session is expected to speed up the fine-tuning policies, economists said Monday.

"Although the economy is growing at a slower pace, the quality of the growth is improving since employment is still growing and residents' income is rising," Tian Yun, vice president of the China Society of Macroeconomics under the National Development and Reform Commission, told the Global Times.

"The focus at the upcoming mid-year economic conference will be on implementing and speeding up fine-tuning policies to maintain stable growth," he said.

The State Council, China's cabinet, is expected to call the mid-year economic conference as early as Wednesday to set up the tone for the economy in the second half of the year, China Securities Journal reported Monday.

On Friday, the National Bureau of Statistics announced that the country's GDP grew 7.6 percent in the second quarter from a year earlier, the lowest since the first quarter of 2009 during the depths of the global financial crisis.

The slower growth fueled speculations that a new round of stimulus policies may be announced at or after the meeting.

"It would be a difficult time from now till the early period of next year, and the economy will continue to face downward pressure," Tian said.

"China's economy cannot sustain double-digit growth rates forever. A slower growth rate based on a healthier economic growth pattern shall be accepted," he said.

On Saturday, Premier Wen Jiabao warned that the country's economic recovery is not yet stable and economic hardship may continue for a period of time, during an inspection tour of Southwest China's Sichuan Province from Friday to Sunday.

But Wen said economic fundamentals remain sound and the country still enjoys huge growth potential, citing the bumper summer harvest, cooling inflation and rising incomes.

In the second half of the year, the government will "increase efforts to preset and fine-tune its policies, and make policies more targeted, foresighted and effective," Wen said.

China has adopted a series of pro-growth measures, including reducing banks' reserve ratio to boost lending and subsidizing energy-saving household electrical appliances to stimulate consumption.

In its latest move, the central bank cut the benchmark interest rate two times in a month, in a bid to inject liquidity into the market.

"China cannot repeat the policy of boosting the economy through massive investment, which can only result in excessive capacity," Wang Xiaolu, deputy director of the National Economic Research Institute under the China Reform Foundation, told the Global Times Monday.

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