The official manufacturing PMI released in May exceeded expectations, signaling a recovery in economic momentum. It's evident that since April, the State Council executive meetings have increasingly emphasized and refined the "micro-stimulus" policy, focusing on targeted support to boost economic activity.
At a recent press conference by the State New Office, Chen Dongqi, vice president of the National Development and Reform Commission’s Macroeconomic Research Institute, stated that the government’s micro-stimulus measures this year have ensured active and stable fiscal and monetary policies, effectively supporting economic development. This is seen as the first formal acknowledgment of the "micro-stimulus" strategy, which appears to be both reasonable and necessary.
According to a report from Gao Hua Securities, the unfavorable factors that affected the economy earlier this year—such as weak consumer demand, slow external demand, and the lagging effects of tightened financial policies at the end of last year—have started to fade. The government’s direct policy support has been relatively modest but focused, contributing positively to the economy.
Since April, Premier Li Keqiang has chaired eight State Council executive meetings, highlighting "steady growth" as a central theme. These meetings have outlined key policy measures aimed at maintaining economic stability and promoting structural reforms.
In early April, the State Council set the stage for a series of growth-supporting initiatives. Li Keqiang emphasized that keeping the economy within a "reasonable range" is crucial for the government’s work. The meeting also approved expanded tax benefits for small and micro enterprises, supported urban slum renovation, and introduced railway investment reforms to accelerate infrastructure projects.
On April 16, Li reiterated the importance of "stable growth," announcing new financial services for agriculture, rural areas, and farmers, along with improved tax policies to promote employment.
Economists from official think tanks told *Daily Economic News* that the Prime Minister’s focus on GDP growth is closely tied to ensuring employment stability. With China’s current economic structure, a 7.4% growth rate is sufficient to meet annual employment targets.
The focus of the steady growth measures has been clear. On April 23, Li highlighted the importance of investment-driven growth and structural reforms to maintain stability. The meeting confirmed policies to grant more investment autonomy to enterprises and encouraged social capital participation in infrastructure projects.
Subsequent meetings addressed export stability, the development of productive service industries, and the acceleration of water conservation projects. These measures were seen as vital for sustaining economic growth.
In the context of China’s ongoing transition from high-speed to medium-speed growth, economists suggest balancing short-term growth with long-term reforms. Liu Shijin of the National Research Center emphasized the need to prioritize reforms that support growth and transformation.
This approach was reflected in the May 14 meeting, where the emphasis shifted toward market mechanisms and innovation-driven development, particularly in sectors like R&D, business services, and after-sales support.
An official from the National Development and Reform Commission noted that macroeconomic regulation now focuses more on supply-side adjustments, such as promoting new urbanization and regional restructuring.
On the demand side, the government aims to avoid temporary stimulus measures. For example, investing in railways in central and western regions can create long-term balance, while improving shantytown renovations and medical insurance supports consumer confidence.
After the implementation of the steady growth policies, signs of recovery began to emerge. In May, the manufacturing PMI hit a yearly high, and the non-manufacturing business activity index rose to 55.5%, showing increased enterprise activity. The Yiwu Small Commodity Index also showed improvement, indicating growing domestic and foreign demand.
The State Council meeting on May 30 further emphasized financial reforms, aiming to better serve the real economy through structural adjustments and timely policy fine-tuning.
Analysts believe that the recent micro-stimulus efforts are coherent, initially targeting key sectors and now focusing on providing financial support to the real economy, thus reviving economic vitality.
Financial reforms and adjusted spending have begun to benefit the real economy. The Ministry of Finance urged departments to use fiscal transfers more effectively and speed up budget expenditures to meet full-year development goals.
CICC reported that a proactive fiscal policy will help stabilize economic growth in the second half of the year, similar to previous measures that accelerated fiscal spending.
While some analysts believe there may still be challenges ahead, especially for small and micro enterprises, the government is expected to act proactively, managing expectations and providing timely support rather than waiting for negative data before taking action.
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