As China’s economy faces continued downward pressure and settles into a “new normal” stage, supply-side structural reform becomes ever more important, according to a statement released by the Political Bureau of the Communist Party of China (CPC) Central Committee after meeting Tuesday.
China’s economy held steady in H1, and supply-side structural reform has seen progress, noted the statement.
“However, the downward pressure facing the economy remains, and potential risks deserving attention still exist,” it noted.
The statement underlined the importance of proactive fiscal policy and prudent monetary policy, as well as the careful management of the speed and direction of macro-economic policy.
China’s GDP expanded 6.7 percent in Q2, the lowest growth rate since the global financial crisis in early 2009.
The economy is widely expected to follow an L-shaped path as downward pressure continues and new growth momentum is yet to pick up.
The statement said credit structures should be optimized to support the real economy. The yuan’s exchange rate is expected to remain stable at a reasonable and balanced level.
As the economy cools, falling demand has led to excess industrial capacity, which is seen as one of the most urgent issues facing the Chinese economy.
The statement said cutting stockpiles and overcapacity were key tasks in the latter half of the year. To achieve this the country should deepen the reform of state-owned enterprises and push forward urbanization.
At a meeting of senior political advisors Monday, Chinese President Xi Jinping called for confidence and resolution on implementing economic strategy.
He asked political advisors to provide practical suggestions for the implementation of supply-side structural reform.
Xi also underlined the importance of poverty relief, which is a key factor in China building a well-off society. He hoped political advisors would closely monitor the poverty relief effort.