China's Cabinet on Wednesday sought to shore up economic weakness in the country, pledging more attention to "stabilizing economic growth" amid fears that the world's second-largest economy may slow further in coming months.
Authorities should give more priority to stabilizing growth and actively boost domestic demand as the economy faces "increasing downward pressure," the State Council said Wednesday.
The government should "place stabilizing growth in a more important position and carry out preemptive policy adjustments and fine-tuning more forcefully according to the changing situation," according to a statement issued after an executive meeting of the State Council presided over by Premier Wen Jiabao.
"Some prominent contradictions and problems still exist in the country's economic development. In particular, the pressure for a downward economic movement is increasing," the statement said.
It noted that China's economy is generally stable with an economic growth rate being kept within the expected target set at the beginning of the year.
However, the environment at home and abroad is becoming more complicated, making the world economic recovery more uneven and more difficult, the statement warned.
The Chinese government set the full-year gross domestic product (GDP) growth target at 7.5 percent for 2012, scaling back the GDP growth goal below 8 percent for the first time in eight years.
In the first quarter of 2012, China's GDP growth slowed to 8.1 percent from 8.4 percent in the fourth quarter of last year, raising concerns that the world's second-largest economy may decelerate further in coming months amid weak external demand and renewed worries over sovereign debt default in Europe.
The statement repeated the government's stance to properly maintain a balance between ensuring steady and robust economic development, adjusting the economic structure and managing expectations on inflation.
"The general direction of the macroeconomic control is unchanged," said Zhang Liqun, a research fellow with the State Council Development Research Center. "But the sharp slowdown in the economy has aroused attention from policymakers."
Responding to the latest changes in the economy, the statement emphasized that efforts be taken to make policies more targeted, more flexible and more foresighted and expand domestic demand.
The Cabinet urged the implementation of structural tax reduction measures to relax the tax burden for business while maintaining a prudent monetary policy.
The statement called for optimizing the credit structure to focus more on satisfying the needs of the real economy and keep social financing at a reasonable level.
The Cabinet also pressed for early construction of major projects in the fields of railways, energy-saving and environmental protection, as well as infrastructure, educational and health care facilities in rural and western areas.
It is hoped that private capital can be lured into sectors such as the construction of railways, municipal utilities, energy, telecommunications, education and health care, according to the statement.
The tightening of the housing market, which makes up a large part of China's economy, will be stabilized and strictly implemented, the statement said, dampening speculation that the government might loosen its macro control of the sector any time soon.
Analysts expect China's economic growth to slow further, judging from April's leading indicators on exports, fixed-asset investment and domestic consumption, which are considered as three major engines powering the economy.
"In the past two weeks, new problems have emerged in the United States and Europe, which is set to downsize China's exports and bring down people's expectation toward the economy," said Li Jian, a researcher with the Ministry of Commerce.
To spur economic growth, the key lies in monetary policy, added Zhang Liqun, who saw a laggard effect of the monetary tightening on the economy.
To rein in soaring inflation, China's central bank raised interest rates three times and hiked banks' reserve requirement ratio six times last year, squeezing credit available in the market.
"Whether the economic growth rate can rebound and demand can stabilize now depends on the monetary policy," Zhang said, calling for measures to relieve the tightening effect on the economy.
"Even though we don't need to panic now as the GDP growth is still within the expected range," he said. "We have to be fully aware of the complexity and severity of the current situation."