China's economy expected to further stabilize

Premier Wen Jiabao said Tuesday that China's economy is expected to further stabilize as recent measures on tax cuts, required reserve ratio, investment, infrastructure and trade facilitation are implemented and take effect.

"Macroeconomic indicators show that China's economic and social development is in good shape," Wen said when addressing the opening ceremony of the Summer Davos Forum held here in northern China's port city of Tianjin.

"The speed of growth is still within the target range set at the start of the year, and although growth is slowing down, it is being more stable. As the recent measures are implemented and take effect, we expect the economy to further stabilize," said Wen.

With the theme of "Creating the Future Economy," the three-day forum gathered about 1,610 delegates worldwide.

This year international political and economic situation has remained complicated and fluid, and brought more difficulties to China's economic development, Wen said.

In line with the overall requirement of making progress while maintaining stability, the Chinese government has strengthened and improved macro-regulation, followed a proactive fiscal policy and a prudent monetary policy, and made the policies more forward-looking, targeted and flexible, he said.

The government has properly handled relations between maintaining steady and robust economic development, adjusting the economic structure and managing inflation expectations, laid greater emphasis on stabilizing growth, and sustained steady and fast economic growth. It has intensified anticipatory adjustments and fine-tuning to respond to the new developments and problems in the economy, said Wen.

He mentioned a host of policy measures taken by the government since May, including stepping up structual tax cuts, lowering the required reserve ratio, cutting the benchmark deposit and lending rates twice, allocating 26.8 billion yuan (4.23 billion U.S. dollars) from the central budget to support enterprising undertaking technological upgrading, pushing forward trade faciliation and actively expanding imports and others.

"All these measures have helped boost market confidence and promote steady economic growth," said Wen.

According to the premier, in the first half of this year, China's GDP grew by 7.8 percent year-on-year. The Consumer Price Index (CPI) in July rose 1.8 percent over the same period of last year and inflationary pressure has notably eased.

"We are fully confident that we have the conditions and ability to overcome the difficulties on our way ahead, maintain steady and robust economic growth and achieve development at a higher level and with better quality for a long time to come," said Wen.

He said the Chinese government will fully utilize the ample fiscal and monetary policy space, fully tap the huge potential of domestic demand and fully motivate the various localities and departments.

It will give greater priority to stabilizing growth, continue to follow a proactive fiscal policy and a prudent monetary policy and step up anticipatory adjustments and fine-tuning, press ahead with strutural tax cuts and keep the increase of money and credit supply at a steady and moderate level, said Wen.

The government will also make stronger efforts to spur consumer demand, expand effective investment with a focus on bringing out the energy of nongovernmental investment, stabilize external demand and bolster the real economy, he said.

The forum was created according to a joint proposal by the Geneva-based World Economic Forum (WEF) and the Chinese government. Northern Chinese port cities of Dalian and Tianjin have hosted the forum in turn since 2007.