Despite the pandemic and domestic economicdevelopment challenges, China's economy has sustained a steady recovery sincethe start of 2021, laying a solid foundation for achieving its full-yeareconomic and social development targets, reported the country's top economicplanner on Aug 18.

In the first half of the year, thecountry's major economic indicators, including economic growth, unemploymentrate and consumer price index, have met expectations, said He Lifeng, head ofthe National Development and Reform Commission, while delivering a report onimplementation of the national economic and social development plan at theongoing session of the National People's Congress Standing Committee.

China's gross domestic product expanded12.7 percent year-on-year in the first half of 2021, and a total of 6.98million new urban jobs were created, according to He. The country's CPI rose0.5 percent year-on-year during the January-June period, and foreign exchangereserves stood at $3.214 trillion by the end of June, He added.

China's proactive fiscal policy so far thisyear has provided support for major strategic national tasks and contributed tothe recovery of the economy as well as the improvement of people's wellbeing,said Xu Hongcai, vice-minister of finance.

Yet with external shocks persisting and newchallenges arising for enterprises, He stressed that greater efforts are neededto consolidate the foundation for economic recovery at home.

To keep major economic indicators withinproper range, Xu said that efforts should be made to undertake cross-cyclicaladjustments. Macro-policies should focus on supporting the real economy,promoting employment, stimulating the vitalities of market entities and copingwith potential cyclical risks.

China's financial sector maintained strongsupport for the real economy, while the central bank slightly slowed moneysupply amid concerns about inflationary pressures building up, showed July'sfinancial data from the People's Bank of China on Aug 11.

The outstanding total social financing,which measures all funds moved from the financial sector to the real economy,increased to 302.49 trillion yuan ($46.64 trillion) in July, up 10.7 percentyear-on-year. The outstanding renminbi-denominated loans to the real economyrose by 12.4 percent year-on-year to 185.38 trillion yuan, PBOC data showed.

Ruan Jianhong, the PBOC's spokeswoman, saidearlier that the credit supplies this year will continually focus on servingthe real economy. The financial sector maintains strong support formanufacturing, infrastructure and the services sector except for the propertysector.

The PBOC's data showed that China's newyuan-denominated loans totaled 1.08 trillion Yuan in July, up 90.5 billion yuanfrom the same period last year.

The PBOC's loan breakdown for the secondquarter indicated that the year-on-year growth of outstanding loans to theproperty sector fell further to 9.5 percent at the end of June, down from 10.9percent at the end of March.

It can be seen as evidence of furtherprogress made on China's dual-circulation development pattern that will divertmore funding away from the property market and toward the real economy, likethe high-tech manufacturing sector, said Lu Ting, Nomura Securities' chiefeconomist in China.

Meanwhile, the M2, a broad measure of moneysupply that covers cash in circulation and all deposits, increased 8.3 percentyear-on-year to 230.22 trillion yuan at the end of July. M2 grew 8.6 percentyear-on-year in June, according to the central bank.

Compared with last year, the money supplyhas slowed amid the continual economic recovery, which also indicated thatChina did not resort to excessive monetary easing to hedge slowdown risks amidthe COVID-19 shocks, said Lou Feipeng, a senior economist at Postal SavingsBank of China.

The central bank said in the latestquarterly report on its monetary policy that the key to containing inflation iscontrol of money supply. And it normalized money supply since May 2020, aheadof other major economies.

The PBOC has been aware of the surge ofproducer prices and predicted they may persist at a high level in the shortterm.

But the inflation pressure is controllableand the producer price index will probably fall back as the (low) base effectfades and global supply production recovers, the central bank said in thequarterly report.

China will continue to maintain stablemacro policies, refraining from "flood-like" stimulus measures andadopting a prudent monetary policy that focuses on supporting the real economy,the central bank said on July 31.

In a statement released after a meeting onwork for the second half of the year, the People's Bank of China pledged tokeep a prudent monetary policy that is also flexible, targeted and reasonablymoderate, and ramp up efforts to improve the green finance system.

In H2, it will also push forward financialopening-up, deepen financial reforms in key fields, and prudently carry out thepilot research and development of the digital RMB, the PBOC said.

To firmly prevent and defuse financialrisks, it will strengthen macro-prudential management, advance the regulationof financial holding companies, and maintain a high level of pressure on firmsspeculating in virtual currencies, according to the central bank.

China will maintain a stable fiscal policyand improve countercyclical adjustments to sustain necessary supports for theeconomic recovery in the second half of this year, Finance Minister Liu Kunsaid on July 30. Fiscal measures will be fine-tuned to make them moreforward-looking and targeted. The new fiscal policy adopted earlier in responseto the aftermath of the COVID-19 pandemic will be kept stable to avoid sharpshifts, Liu told a media conference.

The "proactive" fiscal policytone will remain unchanged, focusing on expanding domestic demand, stabilizingand boosting consumption, as well as driving up investment, he said.

Liu also stressed on risk prevention andrisk resolution, urging adequate issuance of treasuries and local governmentbonds and timely measures to tackle any debt risk at the local governmentlevel.

The Political Bureau of the Communist Partyof China (CPC) Central Committee met on July 30 and discussed the economicsituation and macroeconomic policies in the second half.

A statement issued after the meeting said aproactive fiscal policy should generate greater effect, while the prudentmonetary policy should maintain reasonably ample liquidity and support thecontinued recovery of small and medium-sized enterprises as well as stressedindustries.

It also said the government's budgetaryinvestment and local government bond issuance should be at a proper frequency.

Economists from international financialinstitutions expected that China's fiscal expenditure may accelerate in thefollowing months, especially to speed up local government bond issuance, a keydriving force for stabilizing government-led investment.

China has implemented substantial tax andfee cuts, especially after the outbreak of the COVID-19 pandemic, to supportvulnerable sectors like small-scale businesses. This year, related measures areexpected to continually ease market entities' burden by more than 700 billionyuan ($108.36 billion), following tax and fee reductions of more than 2.6trillion yuan in 2020, said Vice-Finance Minister Xu Hongcai.

According to data released by the financeministry, from January to June, the nation's general public budgetary revenuewas 11.71 trillion yuan, up almost 22 percent year-on-year, given the low baseof 2020 that was influenced by the COVID-19 pandemic. Compared to 2019, it wasup 8.6 percent.

At the media conference, Liu also called onG20 members to improve the new global corporate tax reform plan by consideringdifferent developing situations in various economies, so as to achieve aconsensus at the next G20 meeting in October.

China will step up efforts to address majorfinancial risks to ensure a stable recovery as growth momentum softens amidrising economic challenges, experts said on Aug. 18.

Their comments came after top policymakersin Beijing stressed at a key meeting on Tuesday that more efforts are needed totackle financial risks, as economic stability is crucial for the country'shigh-quality development.

President Xi Jinping called for efforts tocoordinate the forestalling of major financial risks and ensure the country'sfinancial stability based on market-oriented and law-based principles.

Xi, also general secretary of the CommunistParty of China Central Committee, made the remarks at the 10th meeting of theCentral Committee for Financial and Economic Affairs, which he heads.

Participants at the meeting said effortsshould be made to strike a balance between ensuring stable growth andpreventing risks, consolidate the momentum of economic recovery, ensurehigh-quality economic development to defuse systemic financial risks andprevent secondary financial risks while addressing risks in other areas.

China's economic recovery is underincreasing pressure amid a resurgence of COVID-19 cases. Economic data releasedby the National Bureau of Statistics on Monday showed that growth of industrialproduction and retail sales slowed significantly and missed market expectationsin July.

Analysts said that the meeting sent astrong policy signal that the top leadership will take more action to containfinancial risks that could threaten China's economic recovery and high-qualitydevelopment if they are not addressed in a timely and proper way.

Potential risks such as rising bad loans inthe banking sector, more corporate credit defaults, higher debt levels in theproperty market and worsening of some local governments' balance sheets willlikely prompt more policy initiatives from the government, said Xu Hongcai,deputy director of the China Association of Policy Science's economic policycommittee.

"Financial stability matterssignificantly for the Chinese economic recovery. Some risks have accumulatedafter the government adopted a slew of supportive measures, such as increasedgovernment spending and cheaper loans for smaller businesses, to rescue theeconomy from the damage caused by the COVID-19 pandemic," he said.

A report by the National Development andReform Commission, submitted to the country's top legislature for review onAug. 18, said China's domestic demand remained weak and economic recovery isfacing rising challenges.

The country needs to resolve balance sheetrisks of local governments in an orderly way and step up its crackdown onillegal activities in the financial sector, the report said.

Wu Chaoming, chief economist at Chasing Securities,said that steady economic growth is crucial for China to maintain financialstability, and the country's macro policies are likely to strengthen supportfor the economy.

"The meeting has delivered a keypolicy signal that on the balance of stabilizing growth and preventing risks,the heft of stabilizing growth has outweighed the latter amid growing economicheadwinds brought by the Delta variant," Wu said.