By Caijing Staff

(Caijing.com.cn) China will maintain its current macroeconomic stance, including a positive fiscal policy and moderately loose monetary policy, senior policy makers said.
Speaking at a media briefing on Aug. 7, Zhu Zhixin, vice director of the National Development and Reform Commission, said China is at a crucial stage of economic recovery and maintaining stable and fast growth is the government's top priority.

"Positive signs of economic growth are increasing and recovering momentum is becoming clearer," Zhu said, adding that the recovery is neither stable nor balanced.
"External demand is still weak and there are still many factors restricting expansion of domestic demand," said Zhu.

Zhu said current growth is mainly supported by government policies and spending and China still needs to stimulate private-sector investment.

He also said that the world economic slowdown is not over, and the negative impact on China's economy is unlikely to fade in the short term.

"It will take time for the world's major economies to step out of recession," Zhu said.

China's economy grew 7.9 percent year-on-year in the second quarter and 7.1 percent in the first half, making the government's target of 8 percent full-year gross domestic product growth appear within reach.

Fine-Tuning Implementation, Not Policy

Also at the briefing, People's Bank of China vice governor Su Ning said contrary to media reports following the Aug. 5 central bank report, China is not fine-tuning monetary policy.

"The fine-tuning is not directed at monetary policy, but it is the focus, intensity and pace of the implementation of monetary policy that is being fine-tuned," Su said.

"It is a fine-tuning, not a big adjustment," Su said, adding that the PBOC fine-tunes policy implementation as the market situation demands.

He said the central bank will not cap overall commercial bank lending and loan growth is likely to decrease in the second half, compared with the first half.

"In the second half, there will not be as many investment projects as in the first half," Su said.

Asset Prices Not Direct Policy Target

When questioned about concerns over asset price bubbles, Su said the central bank closely monitors changes in asset prices and the reasons behind the changes, but asset prices are not the direct target of the PBOC's monetary policy.

Vice minister of finance Ding Xuedong told reporters at the briefing that the government also aims to ensure equity market stability.

China's banks extended a record 7.37 trillion yuan in credit in the first half. Many experts and government officials are worried that a large portion of the funds are flowing into stock and property markets.

Prices in both markets have surged since the government's 4 trillion yuan stimulus package began to take effect.

In the first half, the benchmark Shanghai Composite Index rose 61.5 percent from the end of 2008.

China's real estate sector slumped in 2008 as the domestic economy slowed.  Following several moves by the central government, including interest rate cuts and favorable polices for first-time home buyers, the market began to rebound.

The property market is recovering, said the NDRC's Zhu.  He cited figures for June that show average property prices rose 0.2 percent year-on-year in 70 large and mid-sized cities.

He also noted that in the first half, housing sales totaled 341 million square meters, up 31.7 percent year-on-year, and developers' property investment rose 9.9 percent from a year earlier to 1.45 trillion yuan.

"It is inevitable that there may be some hotspot issues in some major regions," Zhu said, without citing specific locations.

Zhu said the government aims to promote the healthy development of the real estate market.

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From wires