China says to increase policy support for cooling economy

[BEIJING] China will do more to bolster its cooling economy as its policymakers still have room to increase support, a senior official at the country's top economic planner said on Friday.

Li Yangzhe, the head of the economic operation office at the National Development and Reform Commission (NDRC), said China is confident it can keep its economic growth at a reasonable level.

The economy expanded at a six-year low of 7 per cent in the first quarter. "With current economic growth fluctuating, there will be a greater effort to adjust economic policies," Mr Li told reporters at a briefing. "There will be a bigger effort to stabilise growth." Other NDRC officials at the briefing acknowledged the economy faced considerable headwinds, which they said had increased since June last year.

They said cooling growth in factory output, falling industrial profits, persistent factory deflation as well as slowing export sales and manufacturing investment were the main pressure points.

Yet the officials made clear that China has the means to stabilise its economy, and that activity is not as weak as some fear.

China's unemployment rate, for example, has been stable so far and the country created 3.24 million new jobs in the first three months of this year, said Cong Liang, deputy director the general affairs department at the NDRC.

To boost activity, China will accelerate the construction of big projects, more of which will be announced soon, said Luo Guaosan, deputy head of the investment office at the NDRC.

China must cut interest rates again this year and further reduce the amount of reserves that banks must hold if it wants to meet its economic growth target of around 7 per cent, a Reuters poll showed on Friday, in what would be its biggest bout of policy easing since the 2008 global financial crisis.

REUTERS