China's top economic regulator pledged on Tuesday to roll out policies that would spur consumption and increase effective investment, as part of a package of measures to revive the economy amid the still-weak demand and a gloomy global outlook.
Jin Xiandong, director of the National Development and Reform Commission's Office of Policy Studies, said at a news conference in Beijing on Tuesday that the NDRC will "promptly formulate and introduce policies to restore and expand consumption".
"With the key focus being on areas such as stabilizing spending on big-ticket items, spurring consumption of automobiles and electronic products, expanding rural consumption and optimizing the consumption environment, we will roll out a range of practical and effective policy measures and strive to implement them as soon as possible," he said.
Analysts said that China's slower-than-expected GDP growth in the second quarter showed that the recovery has slowed amid pressures from the real estate downturn and weakening external demand, shoring up the case for policymakers to take more steps to boost domestic demand.
Retail sales, a key indicator of consumer spending, grew 3.1 percent year-on-year in June, compared with 12.7 percent year-on-year in May, data released on Monday by the National Bureau of Statistics showed.
Wang Yun, deputy director of the Chinese Academy of Macroeconomic Research's Institute for International Economic Research, said that a recovery in consumption still needs time to pick up due to the "scarring effects" of COVID-19.
Wang said that more efforts should be made to fully implement existing policies to support the consumption of new energy vehicles in rural areas, optimize the environment for services consumption, further improve the quality of available products and services, and advance reform of the income distribution system.
China's GDP grew 6.3 percent year-on-year in the second quarter, NBS data showed, against the 7.3 percent predicted by a Reuters poll.
Li Hui, deputy director of the NDRC's Department of National Economy, said the foundation for economic recovery is not yet solid due to challenges and risks in the domestic market, and the broader economy is facing pressures from a complicated international environment, a cloudy global outlook and mounting uncertainties.
Given that China has a complete industrial system in place, abundant human resources, an ultralarge domestic market as well as strong policy support, the country has the confidence, conditions and capability to achieve its full-year economic and social development goals, she said.
Several global banks have recently cut their 2023 GDP growth forecasts for China. JPMorgan cut its forecast for China's 2023 GDP growth to 5 percent from the previous 5.5 percent, and Nomura recently lowered its China 2023 growth forecast to 5.1 percent from 5.5 percent.
Rob Subbaraman, head of global macro research at Nomura, said that solely furthering monetary easing may not be effective enough to revive the economy. "Probably the more effective policy tool will be fiscal stimulus," Subbaraman said.
Additional quota of local government special bonds and ramped-up transfer of payments from the central government may be necessary to replenish the funding of local governments so that they can spend more on infrastructure and high-end manufacturing sectors, he said.
Bruce Cameron, chairman of Zespri, a cooperative of kiwi fruit growers in New Zealand, said, "While we see some financial challenges globally, which will no doubt affect all economies, the reality is we still see positive growth for our business in China."
As "the Chinese economy will continue to be resilient", Zespri will continue to invest in the Chinese market to further cater to local consumers' need for better products, he said.