China's economy builds recovery momentum with strong policy stimulus

BEIJING, Sept. 20 (Xinhua) -- China's economic indicators were stronger than expected in August, indicating that the country's pro-growth policies are effective and solidifying its hopes of accomplishing its full-year economic growth target, according to analysts and officials.

Positive factors in China's economy are accumulating, and naysayers will be disappointed yet again, Cong Liang, deputy head of the National Development and Reform Commission, told a press conference on Wednesday.

SUPPORT ON ALL FRONTS

With major economic indicators showing signs of perking up, China has ridden the positive momentum and introduced a string of macro policies across the board.

On the fiscal front, China has revved up its issuance and use of special-purpose local government bonds. And on the monetary front, the country's central bank has made policy rate adjustments and cut the financial-institution reserve requirement ratio twice this year.

"At a defining moment for the Chinese economy, the central bank made its moves at just the right time," said Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited.

The effects of the comprehensive policy package have been reflected in the August data. In August, China's value-added industrial output increased 4.5 percent year on year, higher than the 3.7 percent uptick recorded in July, and retail sales of consumer goods saw an accelerated 4.6 percent increase after a slowdown that lasted three consecutive months, data from the National Bureau of Statistics shows.

The People's Bank of China (PBOC) will continue to utilize a combination of policy tools to keep liquidity at a reasonable and sufficient level, and guide the financing costs of the real economy downward, PBOC official Zou Lan said on Wednesday.

TARGETED PROPERTY STIMULUS

The property sector, though still weighing on the Chinese economy, reported encouraging signs in multiple regional markets in August, according to Cong.

Recently, China relaxed the criteria identifying first-home buyers to allow more people to benefit from preferential policies, and lowered the interest rates of existing first-home mortgages.

Zhong Zhengsheng, chief economist at Pingan Securities, said the slew of measures has apparently prompted a rebound in sales of second-hand homes, although the response in the new-home market is delayed.

Wang Qing, an analyst at Golden Credit Rating, said local governments are expected to double down on efforts to stimulate their housing markets, including efforts to relax home purchase restrictions and provide home purchase subsidies.

"These moves will effectively increase the synergy of macro policies and buoy market confidence in the process of countercyclical regulation," Wang said.

As existing and incremental policies have a synergistic effect, China's economy will rebound and sustain long-term upward momentum, Cong said at the press conference.