July 30, 2015 / 11:00 AM / 4 years ago

China vows more targeted policy steps to lift economy

BEIJING (Reuters) - China’s Politburo has promised to step up “targeted” adjustments to economic policy to foster stable growth in the world’s second-largest economy, media said on Thursday.

An investor looks at an electronic board showing stock information at a brokerage house in Nanjing, Jiangsu province, China, July 30, 2015. REUTERS/China DailyCHINA OUT

In a rare acknowledgement of the challenges ahead, state radio quoted the decision-making body of the Communist Party as saying that China had yet to find new drivers to power its economy at a time when old engines are flagging.

To ensure that the economy can sustain a “reasonable” pace of growth, the Politburo reiterated the government’s line that it would keep economic policies broadly stable, while increasing targeted adjustments.

Chinese policymakers have in the past two years described any loosening in fiscal and monetary policy, including reductions in interest rates, as “targeted”.

Fiscal policy would be “pro-active” and liquidity kept at an “appropriate” level, state radio quoted the Politburo as saying.

There was no reference to the rout in China's stock market .CSI300 .SSEC, which plunged 8 percent on Monday after a recent meltdown that wiped out as much as a third of share value at the height of the selloff.

Buffeted by a slowing property market, cooling investment growth and unsteady local and foreign demand, China’s economy has stumbled in the past two years and is widely expected to clock its worst performance in a quarter of a century this year.

Analysts polled by Reuters earlier this month forecast that China’s economy will grow 7 percent this year, an enviable rate by global standards and bang in line with the government’s target, but the slackest rate in 25 years nonetheless.

Most analysts believe China has to further loosen monetary policy if it wants to generate 7 percent growth.

The analysts, polled by Reuters, expect China to reduce interest rates by another 25 basis points this year, and lower the amount of deposits that banks must hold as reserves by a further 100 basis points.

Reporting by Koh Gui Qing, Winni Zhou and Beijing Newsroom; Editing by Nick Macfie

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