Photo: CFP

China's top leadership affirmed the country's positive economic recovery so far this year while acknowledging new challenges during a meeting convened by the Political Bureau of the Communist Party of China (CPC) Central Committee on Friday, sending what experts said is a rock solid signal that China will continue to support economic recovery with expansive policies.

The meeting also once again stressed the key tasks of the government at the current stage in stimulating economic growth, including expanding demand and consolidating scientific self-reliance, while stressing that China will deepen reforms, expand high-quality opening up and guard against risks in key areas.

The meeting, which was chaired by Chinese President Xi Jinping, analyzed current economic situation and economic work. It said that all departments and sectors across various regions have well coordinated the domestic and international situation, well coordinated epidemic prevention/control and economic/social development, and well coordinated development and security, according to a report of the Xinhua News Agency.

With frontloaded and synergized macro policies, the "triple pressure" of shrinking demand, supply shocks and weakening expectations has been eased, while economic growth has been better than expected, market demand has been gradually recovering, economic development has shown an upward momentum, and economic operation has got off to a good start, the meeting said.

On the other hand, the meeting also pointed that the current improvement in China's economic performance is mainly restorative, with weak domestic momentum and insufficient demand. It also stressed that domestic economic transformation faces new obstacles, and promoting high-quality development still requires overcoming many difficulties and challenges.

Tian Yun, a veteran Chinese macro economist, said that the meeting labelled the current economic situation as being positive but not totally free from risks, as a solid recovery in many domestic industries, foreign trade for example, is yet to happen, maybe in the third or fourth quarter this year.

"I think one signal conveyed through the meeting is that China will not hold back from supportive policies for the current period notwithstanding the better-than-expected economic growth in the first quarter. Instead, the policy direction will still focus on supporting the economy to continue its fast recovery," Tian told the Global Times on Friday.

The meeting also emphasized that China should implement the spirit of the Central Economic Work Conference last year, combining the effectiveness of policies with stimulating the vitality of business entities to form a strong driving force for promoting high-quality development.

Visitors select milk powder at the booth of Hoeslandt at the third China International Consumer Products Expo (CICPE) in Haikou, capital city of south China's Hainan Province, on April 14, 2023. The expo opened to the public on Friday. Photo:Xinhua

Expanding demand and scientific innovation

During the meeting, policymakers reemphasized a number of key missions that the country should take to further propel the economic growth trend. The first job mentioned is accelerating the construction of a modern industrial system supported by the real economy, the Xinhua report showed.

To elaborate on this point, the meeting noted that China needs to consolidate the foundation of technological self-reliance and self-improvement, and cultivate new driving forces for growth. The meeting in particular mentioned that China needs to consolidate and expand the development advantages of new-energy vehicles, as well as attach importance to the development of universal artificial intelligence

This is another occasion on which policymakers stressed the importance of pushing technological self-reliance at a high-level meeting. During a recent meeting of the Central Commission for Comprehensively Deepening Reform under the 20th CPC Central Committee, top leaders also called for strengthening the principal position of enterprises in sci-tech innovation, which it said is a crucial move to deepen structural scientific and technological reform and achieve high-standard self-reliance and strength in science and technology.

The Friday meeting also sent a signal of supporting platform economy by saying that China would push platform economy companies to develop in a healthy, standardized way, as well as encourage leading platform economy companies to explore innovation.

Experts noted that as China economy shifts from a rapid growth period to a period of high-quality development, scientific and technological innovation has become an important "anchor" for China to push such a development mode.

Apart from technological development, the meeting also stressed that restoring and expanding demand is key to sustaining an extended economic recovery. It noted that proactive fiscal policies need to be strengthened, while prudent monetary policies need to be precise and powerful.

According to the meeting, the country would further improve the environment for consumption and promote services consumption such as tourism. In particular, the meeting made note that China should promote the stable and healthy development of the real estate market.

The meeting also pointed out that China must eliminate legal and regulatory barriers and hidden barriers that affect fair competition and common development of enterprises under various ownership systems, and the country will continue to boost the confidence of business entities and help enterprises recover their vitality.

Zhou Maohua, an economist from Everbright Bank, told the Global Times on Friday that the recovery of domestic consumption still lags behind production and supply. For example, property investment was still shrinking in the first quarter, indicating insufficient domestic demands. Meanwhile, overseas inflation remains high which also adds to the uncertainty of China's foreign demand, he said.

"Restoring domestic demand has become the crux of stabilizing China's economic fundamentals, as well as the crux of pushing 'external and internal economic circulation'," he noted.

He also predicted that China will continue to use financial tools to support key areas under premise of maintaining reasonable and abundant market liquidity.

Global Times