Fresh signs of steady rebound seen

China is ramping up stimulus measures to expand domestic demand and boost market confidence in a bid to further consolidate the recovery trend of the world's second-largest economy, said officials and experts.

Li Chao, a spokeswoman for the National Development and Reform Commission, said China's economy is showing fresh signs of a steady rebound with improvement in key indicators despite lingering pressures.

"China's economic recovery still faces many difficulties and challenges, including a more complicated and grimmer external environment and mounting uncertainties," Li said at a news conference in Beijing on Tuesday.

Li said the country will accelerate the implementation of key policies to prop up the economy, including issuing ultra-long-term special treasury bonds for major national strategies and building up security capacity in key areas and driving large-scale equipment renewal and trade-in deals for consumer goods.

During the January-May period, investment in equipment and tool purchases increased 17.5 percent year-on-year, contributing over half of overall investment growth. Sales of home appliances sold on major e-commerce platforms under the trade-in deals for consumer goods program increased by more than 80 percent in the first five months, the NDRC said.

National Bureau of Statistics data showed China's retail sales increased 3.7 percent year-on-year in May, an increase of 1.4 percentage points from April, which experts said was driven by the May Day holiday economy and early sales during the extended June 18 online shopping carnival (known as "618").

Chang Haizhong, executive director of corporates at Fitch Bohua, said May's retail sales growth is still significantly lower than pre-pandemic levels, suggesting that the problem of insufficient effective social demand has not been remedied.

However, Chang said the growth rate in May has ended the continuous slowdown since the beginning of the year.

"Considering the lower base and the gradual effectiveness of consumer stimulus policies, we expect the growth rate of total retail sales of consumer goods in June to accelerate," Chang said.

On the investment front, Chang said he expects that with the equipment renewal policies taking effect, investment in the manufacturing sector will continue to grow rapidly going forward, and infrastructure investment will maintain a moderate growth rate in the second half.

Citing a series of significant stimulus policies introduced in mid-May, he said housing sales indicators have slightly improved.

Chang said the year-on-year decline in sales area and sales of newly built commercial housing units in May narrowed by 2.1 and 4.1 percentage points, respectively, to 20.7 percent and 26.4 percent in May.

"If sales continue to improve, it will be transmitted to property investment, then the decline of the latter will be significantly narrowed, and the drag on fixed-asset investment and economic growth will be reduced."

Xiong Yuan, chief economist at Guosheng Securities, said the broader economy is still facing pressure from lackluster domestic demand, and called for stronger policy stimulus measures to boost demand and stabilize the property sector.