Despite all the heightened attention and occasional panic over China's economic
health, authorities in the world's second-largest economy have so far remained
confident of the ongoing rebalancing act.
On Tuesday, the Political Bureau of the Communist Party
of China (CPC) Central Committee pledged at a meeting to keep the economy
growing steadily in the second half of this year, while promising to fine-tune
policies when necessary.
"The macro policy should be stable, the micro policy
should be flexible and the social policy should support the bottom line. All of
them should be coordinated," read the statement released after the
meeting.
The comments were seen as a reaffirmation that a stable
environment is necessary for pushing ahead with reforms for long-term
sustainable growth.
"A stable policy environment would not only allow time
for the market to adjust itself, but also help create a favorable condition for
reforms and avoid drastic fluctuations in market expectations," said Kuang
Xianming, director of economic research with the China Institute for Reform and
Development.
Drastic policy changes are unlikely unless there are
unforeseeable external or internal shocks, he added.
China's economy expanded 7.6 percent in the first half
of the year, slightly above the annual 7.5-percent target set for 2013, and
prospects for the second half remain complicated given the sluggish external
market, weak domestic strength, persisting overcapacity and growing financial
risks.
Chinese leaders have so far demonstrated greater
tolerance for slower growth in their efforts to switch the country's growth
model from its dependence on credit expansion and manufacturing toward one
driven by consumption, innovation and services.
Instead of initiating a massive stimulus program again
to lift the economy, the authorities are moving cautiously to steady growth
while driving through reforms in which President Xi Jinping has called for
"greater political courage and wisdom."
Since taking office in March, the new government has
been proceeding with reforms in a wide range of areas, including delegating
administrative power to lower levels and easing controls in the financial
sector.
In July, China's central bank lifted controls on bank
lending rates, in a clear signal of the government's determination to push
forward market-oriented reforms.
Later, the government took several small steps, such as
cutting taxes for small and micro businesses and eliminating outdated capacities
to stimulate while restructure the economy.
"If growth slips under 7.5 percent, the government may
lend more policy support focusing on balancing growth, reform and
restructuring," predicted Lian Ping, chief economist at the Bank of
Communications.
In Tuesday's meeting, the central authorities said
China will "keep reasonable investment growth" and promote "steady and healthy
development in the property market," which boosted property stocks the following
day.
Lian said the CPC leaders' comments showed that, even
though China wants to wean off over-reliance on investment, it cannot cut
investments too fast as a freefall in the sector will threaten
growth.
China's fixed-asset investment, a measure of government
and private spending on infrastructure, grew 20.1 percent during the first half
of 2013, down 0.3 percentage points from the same period last year.
Considering the government's intention to maintain
stable investment growth and possible policies to bolster consumption, Lian
forecast growth for the whole year will be basically stable though downward
pressures remain in the second half.
"Growth may slow to below 7.5 percent in the third and
fourth quarter, but full-year expansion is likely to be at around 7.5 percent,"
he said.
Believing China is still well-positioned to carry out
further reforms in the second half of the year, Kuang Xianming said the upcoming
plans due to be released at a plenary meeting of the CPC Central Committee will
lay an important foundation for development in the next five to 10
years.