NDRC says nation will consolidate recovery trend

China is set to take further actions, including speeding up the issuance of local government special bonds and expediting the promotion of large-scale equipment renewal and trade-in deals for consumer goods, as it seeks to consolidate the recovery trend, the country's top economic regulator said on Tuesday.

Analysts said the country is scrambling to tackle issues related to the still-weak domestic demand and property industry woes with further stimulus measures in the offing, which will significantly stabilize expectations and restore confidence in the world's second-largest economy.

Li Chao, a spokeswoman for the National Development and Reform Commission, emphasized the country's commitment to sustaining the recovery and optimizing the structure of the manufacturing sector. More efforts will be made to foster new quality productive forces, boost high-quality development of the manufacturing sector, expand effective investment and spur consumption, she said.

Li told a news conference on Tuesday that the country will "make better use of ultra-long-term special-purpose treasury bonds to support major national strategies and build up security capacity in key areas, accelerate the issuance and use of local government special bonds and speed up the implementation of the central budget investment plan".

From January to April, the NDRC approved 50 fixed-asset investment projects worth 320.7 billion yuan ($44.32 billion) in all, mainly in the high-tech and water conservancy sectors. The NDRC approved 20 fixed-asset investment projects worth 115.2 billion yuan in April.

To stimulate domestic consumption, the country will further implement policies prioritizing employment stability and income growth, alongside initiatives to drive large-scale equipment renewal and trade-in deals for consumer goods, Li said. "This will include incentives for encouraging spending on consumer goods like cars, home appliances and cellphones, promoting new consumption scenarios and formats, as well as encouraging enterprises' application of advanced and applicable technologies for (digital) transformation and upgrading."

The latest data from the National Bureau of Statistics showed recovery is still uneven. China's value-added industrial output grew by 6.7 percent year-on-year in April after a 4.5 percent rise in March, while retail sales rose 2.3 percent in April, less than the 3.1 percent rise in March, according to the NBS.

During the first four months, China's fixed-asset investment increased by 4.2 percent year-on-year, while in the first quarter, it grew by 4.5 percent year-on-year.

Xiong Yuan, chief economist at Guosheng Securities, said the latest data confirm an uneven recovery in the broader economy.

"We've seen a notable improvement in sectors relative to external demand, including exports, industrial production and manufacturing. However, on the domestic demand side, consumption and investment performed worse than expected."

Citing recently released government policies, including a series of property easing measures, Xiong said the country aims to tackle issues and pressures from still-weak demand and confidence. To boost domestic demand, China will likely introduce more stimulus measures like further reductions in both banks' reserve requirement ratio and interest rates.

Despite pressures and challenges ahead, Robin Xing, chief China economist at Morgan Stanley, said resilient exports and manufacturing capex are likely to be the key growth drivers this year, backed by a global trade recovery and a policy push to upgrade supply chains.