Flexibility key to steady economy

Manufacturing PMI down slightly, but still in expansionary territory

China will maintain economic growth within a reasonable range by making policies more forward-looking, flexible and effective, according to a meeting of the Political Bureau of the Communist Party of China Central Committee on Tuesday.

The meeting, presided over by Xi Jinping, general secretary of the CPC Central Committee, determined that the country will adhere to a proactive fiscal policy and a prudent monetary policy to maintain stable and healthy economic development, according to a Xinhua News Agency report.

To that end, the country will improve its policy foresight, flexibility and effectiveness, the report said.

The economy is currently facing transformation, new issues and challenges, and the external environment has undergone significant changes. The country will better balance its financial risk prevention and boost support of the real economy, and will resolutely maintain its deleveraging drive while better managing its pace and intensity, according to the report.

"The macroeconomic policy direction will not fundamentally change," said Zhang Ming, an economist with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. The policy adjustments are made against the backdrop of a significantly changing external environment and are intended to prevent a serious economic slowdown and excessive risk exposure as a result of the combined effect of external shocks and domestic deleveraging, he said.

The meeting stressed that fiscal policy should play a larger role in expanding domestic demand and economic restructuring, while money supply should be properly managed and liquidity should be kept "reasonably ample", according to the report.

The wording of the meeting shows that fiscal policy may be more proactive than monetary policy going forward, Zhang said.

China will maintain the basic goal of "seeking progress while maintaining stability" for its economic work and allow the economy to continue to perform within an appropriate range, it was said at the meeting.

Efforts should be made to push supply-side structural reforms and win the "three tough battles", namely, forestalling and defusing major risks, targeted poverty alleviation and enhancing pollution controls, according to Xinhua.

The authorities will stabilize China's employment, financial sector, foreign trade and investment, and protect the legitimate rights and interests of foreign enterprises in China, it was said at the meeting.

The country will continue to devise effective reform measures and implement its policy of economic opening-up and market access expansion.

The challenge of the real estate market will be well handled and efforts will be made to "resolutely stem property price rises", according to Xinhua. The process of establishing a long-term mechanism for the stable and healthy development of the property sector will be accelerated, it said.

"Property controls target first- and second-tier cities," Zhang of the CASS said. Since the authorities have vowed to speed up establishment of the long-term mechanism for the sector, real estate supply may increase significantly in the future and new property taxes may be levied earlier than expected, said Zhang.

The meeting also reviewed the regulations of the CPC on disciplinary action.

Also on Tuesday, China released its official manufacturing purchasing managers index, a measure of industrial activity. The index edged down to 51.2 in July from 51.5 in June, but remained above 50 — the level separating expansion from contraction.

The July performance, based on a survey of purchasing managers and released by the National Bureau of Statistics on Tuesday, was hit by weather and seasonal factors as well as growing Sino-US trade frictions, said Zhao Qinghe, a senior NBS statistician.

Despite the slight month-on-month slowdown, the manufacturing PMI had been above the 51 mark for five consecutive months.

"The index remains in expansionary territory, and the economy has largely maintained its growth momentum," said Zhao.

Contact the writers at xinzhiming@chinadaily.com.cn