Stabilization Expected for China's Economic Growth Amid Shift to New Drivers

China's economic growth is expected to stabilize in the second half of the year as policymakers address structural challenges arising from the transition in growth drivers. The comments came after a meeting on Thursday of the Political Bureau of the Communist Party of China Central Committee, presided over by Xi Jinping.

Economists said the meeting addressed a major challenge facing China's economy, as rapidly expanding new industries have yet to fully offset the slowdown in traditional sectors and insufficient domestic demand. To address this, policy focus should be on stepping up macro policy stimulus and accelerating investment in emerging industries and industrial upgrading.

Zhu Feng, China chief economist at JPMorgan, said that growth momentum in the third and fourth quarters will likely improve from the second one, but divergence could persist amid the transition from old to new growth drivers. New growth engines, led by artificial intelligence and the smart economy, are buoying related investment, high-tech manufacturing, and some export sectors.

The People's Bank of China has pledged to comprehensively utilize monetary policy tools and make timely adjustments to keep ample liquidity. Yin Yanlin, deputy director of the Committee on Economic Affairs, suggested considering additional treasury bond issuance when necessary and cutting reserve requirement ratios and interest rates at a proper time as imported inflation pressure eases.