People tour a local market at the Qingyun Road in Nanming District of Guiyang, capital city of southwest China's Guizhou Province, July 21, 2022. Photo: Xinhua

On Thursday, top Chinese officials held a closely watched meeting that analyzed the current economic situation and set the tone for economic work in the second half of 2022, emphasizing efforts to keep the Chinese economy operating in "reasonable range" and to strive for the "best result" while also stressing sticking to the country's dynamic zero-COVID strategy.

The meeting, which also covered fiscal and monetary policies and other economic stabilization measures, highlighted top Chinese leadership's confidence in not only keeping the COVID-19 under effective control, but also keeping the world's second-largest economy stable, despite lingering challenges, analysts said. They noted that implementation of supportive measures could accelerate and boost growth in the second half of the year.  

Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, presided over the meeting of the Political Bureau of the CPC Central Committee to analyze current economic situation and arrange economic work for the second half of this year, according to the Xinhua News Agency.

China has effectively coordinated COVID-19 prevention and control with economic and social development, with positive results seen and new achievements made on the two fronts. But the meeting also noted "some prominent challenges," calling for maintaining strategic focus and running China's own affairs well.

China's GDP expanded 2.5 percent year-on-year in the first half of 2022.The growth was achieved after the country's GDP grew 0.4 percent year-on-year in the second quarter amid the COVID-19 outbreaks in major economies powerhouses, including Shanghai.

For the second half of 2022, the meeting urged efforts to consolidate the upward trend of economic recovery, keep employment and prices stable, keep the economy running within an appropriate range, and strive for the best possible outcome.

Efforts are needed to efficiently coordinate COVID-19 prevention and control with economic and social development, the meeting said.

The orderly operations of major functions that affect China's economic and social development should be ensured, the meeting noted. 

Analysts maintain that the meeting showed the top Chinese leadership's confidence in keeping the virus at bay while keeping the economy humming, as it has deployed a multipronged approach in both stabilizing the supply and the demand sides primarily through the existing fiscal and monetary supportive measures.

China has largely dealt with the sudden impact of the Russia-Ukraine conflict and epidemic outbreaks that seriously affected economic powerhouses including Shanghai in earlier summer. The economy is now on a recovering trend, and now it is time to meticulously implement fiscal and monetary support policies in the second half, analysts said.

Now China has found a balance between economic development and containment of the epidemic, Tian Yun, a Beijing-based veteran macroeconomic analyst, told the Global Times on Thursday.

The recovery of the entire economy is relatively obvious after the country has ensured normal nucleic acid testing, timely detection and quarantine, especially home isolation, said Tian.

"The top CPC leadership meeting has made it clear that China will expand domestic demand, which will be the focus of policymaking for the second half of the year. Greater efforts should be made in new infrastructure," Tian noted.

China's exports performed strongly in the first half of 2022, with a 13.2 percent year-on-year increase. Consumption and investment were less satisfactory.

Since July, the prices of bulk commodities and raw materials have dropped significantly, and this has laid a good foundation for China to accelerate infrastructure construction in the third and fourth quarters, Tian noted.

The main problem of economic growth still comes from the weak demand, so the meeting has issued a variety of arrangements on how to promote the demand, Hu Qimu, chief research fellow at the Sinosteel Economic Research Institute, told the Global Times on Thursday.

"The Chinese economy is already bouncing back, so we must persevere the current growth trend, which will lead to a relatively good economic growth for the whole year," said Hu.

Lian Ping, head of Zhixin Investment Research Institute, told the Global Times on Thursday that all the supportive policies designated to shore up growth in 2022 have been rolled out by now, and this is a big sum at an estimated 7 trillion yuan ($1.04 trillion), including special-purpose bonds, profit handed over by the central bank and policy bank loans.

"In the second half, it will be about how these funds are effectively implemented on the ground and how these funds could leverage more financial resources from the market to give the economy a shot in the arm," Lian said, noting that any further supportive polices rolled out in the second half will actually be meant for 2023.

A ship docks at the port of Dalian in Northeast China's Liaoning Province on July 3, 2022, marking the start of operations for a new service connecting China to Vietnam and Thailand. Dalian port currently hosts 88 export-oriented container shipment routes. Photo: cnsphoto

Houses and jobs

In July, the economy is confronted with crisis at several rural banks in some localities and default mortgage risks, unfinished housing projects in many cities also reflected the woes in the property sector.

For the first time, the CPC leadership meeting included "ensuring housing delivery" in a politburo document, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Thursday.

The words "stabilize real estate industry" ranked before "houses are for living, not for speculation," which fully shows the occurrence of unstable factors in current real estate market, including loan disturbances and the debt risk of real estate enterprises, said Yan.

"The real estate sector is currently the biggest drag on economic growth and must be resolved in the third and fourth quarters so that it will be on a normal growth path," Tian noted, adding that it is not normal to see four consecutive quarters of negative growth in the housing sector - from the third quarter of 2021 to the second quarter of 2022.

Besides the property sector, right now the most important thing in the second half of the year is to ensure employment to stabilize the overall economy, Wang Dan, chief economist of Hang Seng Bank China, told the Global Times on Thursday.

The normalization of regulation on platform economy, another signal from the top leadership meeting, will hopefully keep platform companies growing and provide more jobs, Wang said.

Analysts say that despite the new challenges of the second quarter, China will still be the world's fastest-growing economy, and with the meeting highlighting the support for the industrial chains, the main policy for the rest of the year will be aimed at addressing the liquidity difficulties of enterprises, and at strengthening the resilience and competitiveness of the Chinese industry chain.

In its latest forecast this week, describing the world's economic outlook as "gloomy and more uncertain," the IMF projects China, the world's second-largest economy, to grow 3.3 percent in 2022, compared with 2.3 percent for the US and 2.6 percent for the eurozone.