MNI POLICY: Top Econ Body Says China Growth Target Will Be Met

     BEIJING (MNI) - China will enhance the flexibility of macroeconomic

policies to boost domestic demand and ensure the stability of economic growth as

uncertainties surrounding the global economy are intensifying, the National

Development and Reform Commission (NDRC) -- China's leading economic planning

body -- said in a press conference on Tuesday.

     Below are the main points from the presser:

     - China will increase investment at a "proper" pace to boost domestic

demand, the planning body said. The comments came after the National Bureau of

Statistics released data on Monday which showed that fixed-asset investment grew

at a record low pace in H1, stoking concerns over the outlook for China's

economic performance in the second half of the year. The NDRC attributed the

slowdown in infrastructure investment to a cyclical cooling in demand following

a previous period of rapid growth and also pointed to the dampening impact

stemming from the enhanced regulation of projects as part of an ongoing drive to

reform local government finances. It indicated, however, that it expects "stable

growth" of investment in H2.

     - China will provide more fiscal support by pushing forward with tax and

fee cuts, and will further open up its economy, in order to offset the negative

effects of its trade spat with the U.S. The ramifications for Chinese companies

will be carefully evaluated and "targeted support" will be provided. The NDRC

stressed that China has plenty of experience to cope with this "grim,

complicated and difficult" situation and will still be able to meet the 2018

economic growth target that it set earlier this year.

     - The NDRC will strictly monitor the usage of capital freed by recent

reserve requirement ratio (RRR) cuts. Most recently, the PBOC cut the RRR for

commercial banks by 50bps from July 5, unlocking CNY700bn for banks, CNY500bn of

which is supposed to support debt-to-equity swaps (DES). However, there are

concerns that the funding could instead be used for purposes such as bailing out

zombie state-owned companies and investing in the property market. The NDRC

noted that the government will not support zombie companies and emphasised that

DES should be conducted in a market-oriented fashion.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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