China pledges second-half policy support as faces complex economic situation

BEIJING (Reuters) - China will ensure policy support for the economy in the second half, in the face of a “severe and complex” economic situation, a top decision-making body of the ruling Communist Party said on Thursday.

China’s monetary policy will be more flexible and targeted and its fiscal policy will be more proactive, state media reported after a Politburo meeting chaired by President Xi Jinping.

A stronger-than-expected rebound in activity in the second quarter has reduced the urgency for further action from the People’s Bank of China (PBOC) following unprecedented emergency measures early in the year.

But, as measures remain in place to contain the novel coronavirus, the Politburo pledged to ensure “reasonable growth” in money supply and social financing and said macro economic policy coordination must be strengthened given a “severe and complex” economic situation.

“We will ensure macro policies will be implemented and be effective,” it said in comments carried by state news agency Xinhua.

“Many problems facing China are expected to exist for the medium- to long-term. (We) must have the mindset to fight a long-term battle,” it added.

The Politburo said it aims to lower significantly overall financing costs for companies with the next round of financing support, mainly focusing on manufacturing and small and micro firms, and expand effective investment and final consumption to boost domestic demand.

China will also safeguard funding for major projects, the Politburo said.

For the real estate market, it reiterated that “houses are for living, not for speculation,” a slogan it has been using for its multi-year tightening campaign.

“(We) must achieve the long-term balance of stable growth and risk prevention,” it said.

The Politburo also pledged to pursue higher quality economic growth and push reforms and opening up of the economy during the 14th five-year plan period (2021-2025), but did not give further details.

China will strive to achieve its 2020 economic and social development goals and tasks, state television quoted Xi as saying in a separate meeting on Thursday.

Reporting by Yawen Chen and Kevin Yao; Editing by John Stonestreet and Barbara Lewis