Innovative micro-measures pep up growth in China

With a focus on long-term development, China is trying to bolster growth with micro-measures and innovative reform initiatives, instead of short-term stimulus policies.  [Special coverage]

As Premier Li Keqiang stressed on Thursday, China would pay more attention to sound economic development in the medium and long term.

"We will not resort to short-term massive stimulus policies just because of temporary economic fluctuations," the premier said in a keynote speech at the opening ceremony of the 2014 Boao Forum for Asia.

Li also expressed confidence that the country can keep its economy functioning within the proper range.

"With all the principles established and policy options at our disposal, we can handle all possible risks and challenges. China's development has strong resilience."

Daniel Gros, director of the Brussels-based Center for European Policy Studies, said he agreed with Li about China's economy, which is ushering in a new stage of quality and efficient development.

He said China's growth model has undergone visible changes since last year when a blueprint for comprehensive reforms was unveiled, and its economic upgrade and transformation, especially in the service and consumption areas, would bring opportunities to other nations.

Li's remarks came after a State Council meeting last week that unveiled a set of supportive policies, including tax cuts for small businesses, shanty-town renovation and railway construction projects.

Rather than being seen as stimulus policies, it is believed that these measures will stabilize growth by enhancing economic efficiency while avoiding future financial troubles.

Analysts and observers pointed out that one distinct characteristic of this round of supportive measures is to replace traditional, large-scale macro-regulations with creative micro-measures that focus on specific areas and industries.

And they said the government is optimistic about the country's economic conditions as the documents released by the State Council did not mention any stimulus measures.

Indeed, this round of supportive measures, with a focus on deepening reforms, steered clear of the familiar path of investment-driven development that resorts to stimulus whenever there are signs of slowdown.

As Nicholas Consonery, Asia specialist at the Eurasia Group, has said, these measures are "more as an attempt to shore up domestic confidence in the economy than as a step to usher in aggressive stimulus moves."

The government, which showed patience and determination in implementing the comprehensive reforms, has learnt to use the power of market to secure sustained development.

It planned to set up a railway development fund, the first of its kind, and introduce new types to railway construction bonds to finance railway construction.

It also decided to let the China Development Bank, the largest policy bank in the country, set up a special organization to issue targeted housing financing bonds to other financial institutions in support of shanty-town reconstruction and other infrastructure projects.

The new financing approach, seen as a reform step, will help establish a long-term sustainable funding channel for much-needed infrastructure projects.

"These measures show that the government aims to stabilize short-term growth with policies which can enhance efficiency while avoiding future financial troubles," said Lu Ting, economist with Bank of America Merrill Lynch, in a research note.