Policy measures to yield results in H2, says NBS official

What factors will contribute to maintaining this steady momentum into the second half?

We are confident full-year economic and social development targets will be reached and the economy will continue to stabilize.

China has yet to complete its urbanization and industrialization so there is still great potential in industrial and technological updating.

According to our estimates, over the past decade, one percentage point of increase of urbanization led to 3.7-percentage points of growth in investment and 1.8-percentage point growth in consumption.

The effects of the State Council's series of policies and measures will be more apparent in the second half. From a financial policy perspective, the government issued a series of fiscal policy measures including allowing local governments to issue new bonds and swap local debt for new official municipal and provincial bonds to initiate major infrastructure project packages, involving railway, urban rail transit, airport and other large-scale projects.

In the second half, such investment growth is expected to rise as debt financing functions of local governments are restored. From a monetary policy perspective, the central bank cut RRR, lowered benchmark interest rates and relaxed various purchasing policies and as a result we expect real estate development and investment to rebound in the second half.

What major difficulties and problems face the economy?

The global economic recovery remains slow, trade protectionism is rising and international trade growth has been sluggish for three years. China's exports grew less than 1 percent in the first three months, so meeting its full-year target will be hard.

There are also a number of outstanding internal problems. Businesses are facing overcapacity difficulties. Profits dropped in the first half due to falling commodity prices, rising costs and slowing sales.

And some resources-exhausted cities and old industrial bases are seeing shrinking local fiscal revenue and are under pressure to create more jobs.

How can the existing difficulties be overcome and the economy stabilized?

In the short term, we need to let investment play a role in driving the economy. In the medium to long term, economic restructuring will rely on innovation, but most importantly, we need reform to unleash vitality and allow the market to really play a decisive role in the allocation of resources.

Deepening reform at this stage should be focused on four aspects: Liberalization of price controls, lowering entry thresholds of industries, further relaxing in technology management and accelerating State-owned enterprise reforms.

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