China moves to boost growth momentum amid market volatility

(Xinhua) Updated: 2015-07-10 09:35

The State Council on Wednesday demanded that policies, reform measures and projects be implemented to ensure economic growth remains in a proper range, as they will promote quality growth and upgrading.

The World Bank predicted China's economy would expand 7.1 percent in 2015 and 7 percent in 2016, largely in line with its previous predictions.

Not every economic figure is positive. Consumer inflation ticked slightly higher in June while at the wholesale level, deflation remained a problem for the 40th month in a row.

Wen Bin, chief researcher with China Minsheng Bank, said this shed light on continuously weak domestic demand and that there was still room for the central bank to ease its monetary policy.

To combat the economic slowdown, China's central bank cut the benchmark interest rates four times since November and lowered banks' reserve requirement ratio twice since February.

China's cabinet Wednesday decided that more than 250 billion yuan ($41 billion) in misused or dormant funds should be reclaimed by fiscal bodies, and the money should be invested in underfunded areas.

Growth in China's service sector remains robust, especially in advanced services such as banking and insurance, and consumption has grown slightly faster than investment in recent years.

Market bleeding eases

An unprecedented battery of measures to pump up the market has showed early signs of recovery and has boosted investor confidence.

Chinese shares posted a strong rally on Thursday, with the benchmark Shanghai Composite Index (SCI) leaping 5.76 percent to finish at 3,709.33 points.

The Chinese stock market was among the world's best performers earlier this year, with the SCI surging more than 150 percent within 12 months, partly fueled by margin trading, as some investors borrowed money to buy shares.

As margin traders began to unwind their positions and some investors cashed out, the market has taken a nosedive since mid-June with the index losing more than 30 percent as of Wednesday from the recent peak on June 12, and many shares' value had halved.