Top leader vows to meet growth target

China still faces a strategic opportunity and economy is poised to expand steadily

China's top leadership says it will guarantee that the 7.5 percent growth target for this year will be met, despite the continuing economic slowdown.

President Xi Jinping made the remark on Tuesday when he chaired a meeting of the Political Bureau of the Communist Party of China's Central Committee to lay out the economic strategy for the second half of the year.

Chinese President Xi Jinping (2nd R), who is also general secretary of the Communist Party of China (CPC) Central Committee, talks with staff members and farmer customers at a rural equity transaction house in Wuhan, capital of Central China's Hubei province, July 22, 2013. Xi made an inspection tour in Hubei from July 21 to July 23. [Photo / Xinhua]

The meeting decided that China will "maintain steady growth, adjust economic structure, and forge ahead with reform" to guarantee "this year's key tasks for economic and social development will be fulfilled".

According to a statement from the political bureau, major economic indicators for the first half are still in a reasonable range, despite extremely complicated domestic and international conditions.

The authorities believe the country still faces a "strategic opportunity" and has the conditions for steady and healthy economic growth. "The economy will maintain steady growth in the second half of this year," the statement said.

The meeting also underlined the need to prepare for complex and difficult situations, as the global economic recovery has not been progressing well.

The government will maintain "stable macroeconomic policy, flexible micro policy and social policy that can support the bottom line," the statement said.

Policy fine-tuning will be possible at the right time, it added.

China's economic growth rate in the second quarter slowed to 7.5 percent from 7.7 percent in the first three months, with the leadership determined to transform development patterns and focus on long-term rebalancing.

In the first half, the Consumer Price Index - a main gauge of inflation - increased by 2.4 percent year-on-year, compared with 3.3 percent in the same period of 2012, lower than the year's target of 3.5 percent.

The political bureau highlighted key areas to guide macroeconomic policy and to focus on improving the quality of economic growth:

• Maintaining a proactive fiscal policy and prudent monetary policy, and improving efficiency of fiscal funds to support the industrial economy;

• Upgrading public consumption, maintaining rational investment growth and encouraging healthy development of the real estate market;

• Strengthening policy support and services for small and medium-sized enterprises, and removing administrative fees to ease the burden on small businesses;

• Accelerating the development of the information, energy conservation, environmental protection and new-energy industries, as well as boosting emerging services;

• Stabilizing foreign trade, broadening exports and raising imports, while encouraging qualified enterprises to invest overseas.

Analysts said more detailed measures are expected to be announced after the third quarter to improve structural reforms and release stronger driving power for economic growth.

"China is on the right track for economic reform," said Jean Pierre Petit, president of Green Economic & Financial Notebooks, a French economic research organization founded in 1986.

He was quoted by French newspaper Le Monde last month as saying that China has weathered the global financial crisis better than any other major country.

Addressing China's economic situation, Petit said an economic slowdown in the country may have a negative impact on the global economy.

But in the long run, China will welcome the shift from an investment- and export-driven economy to a model favoring consumption. "This is a welcome trend," he said, adding that this is the right direction for the new leadership to take.

Zhu Haibin, chief China economist with JPMorgan, expects "the economy's sequential growth momentum to stabilize and improve modestly in the second half".

He added, "Not surprisingly, Premier Li Keqiang has reiterated maintaining the 7.5 percent growth target for 2013 — with labor market conditions being the key area of concern."

Zhu said the service sector is in better shape, but the manufacturing sector is suffering because of overcapacity.

While GDP growth slowed to 7.6 percent in the first half, growth in tertiary-sector GDP, which mainly reflects service activities, improved modestly to 8.3 percent year-on-year, according to the National Bureau of Statistics.

Possible fine-tuning by policymakers in the second half may see the central bank cut the reserve requirement ratio to supplement market liquidity if capital outflows increase, Zhu said.

"But a more important task for the central government is to improve financial reforms," Zhu added.

Tuo Yannan in Brussels contributed to this story.

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