Better targeted measures needed to bolster economy

Chinese Premier Li Keqiang (2nd L front) shakes hands with employees while visiting train manufacturer CSR Zhuzhou in central China's Hunan Province, July 4, 2014. Li made a research and inspection tour in Hunan on July 3 - 4. (Xinhua/Ma Zhancheng)

Economists at government think tanks have called for more targeted measures to bolster the economy.

"Targeted measures have played a crucial role in stabilizing the economy, reflected by a series of encouraging economic data," Zhang Zhanbin, an expert at the Chinese Academy of Governance, told Xinhua.

To steady growth near its target of 7.5 percent without disrupting plans to restructure the economy, the central government has unveiled a string of measures, the latest of which was to cut the reserve requirement ratio (RRR) by 0.5 percentage points for banks engaged in proportionate lending to the farming sector or small enterprises.

However, during a meeting in the central Chinese city of Changsha on Thursday, Premier Li Keqiang demanded more attention be paid to such controls while keeping the country's economic growth within a proper range.

China's economic growth slipped to 7.4 percent in the first quarter, the lowest pace since the third quarter of 2012, but recovery in key indicators in the last three months has pointed to stabilization.

Growth in China's manufacturing sector accelerated to a six-month high in June, registering a strong end to the second quarter and an encouraging sign that the economy is stabilizing.

The Chinese economy improved in the second quarter from the first, indicating its "huge tenacity, huge potential and huge resilience," Li said. However, difficulties and problems should not be ignored, he added.

To boost the economy, the premier highlighted three aspects, including invigorating the market, increasing supply of public goods and letting the financial sector provide more support to the real economy.

On how to invigorate the market, Zhang, echoing the premier, said more important administrative powers belonging to the authorities should be either abolished or delegated, as most of the powers that have been delegated so far involve relatively minor projects.

In increasing supply of public goods, Zhang Liqun, an economist at the Development Research Center of the State Council, said the government should do more to encourage the market and private capital to play a bigger role in infrastructure building and provision of public goods.

Compared with its infrastructure, China has a grave shortage of high-quality public services, especially in medical, education and eldercare sectors, where enormous room exists for investment and development, according to Zhang Liqun.

As it generally takes a long time to see returns from investment in public services, which mostly involves large amounts, private investors normally are not so willing to take the plunge, he said.

"That's why the government should offer more good news in preferential policies for financing, land provision and taxation," Zhang Liqun urged.

On the financial sector supporting the real economy, Niu Li, an economist at the State Information Center, hailed the targeted RRR cut as a "sharp blade" in fine-tuning the financial policies.

However, he said there had been too much so-called superficial "innovation" in the financial sector, urging the financial institutions to enhance support for the real economy.

Echoing Niu, Zhou Jianqi, another expert at the State Council's Development Research Center, called on the central government to establish a nationwide system, incorporating more financial institutions, where small businesses can get better financial services.