(Yicai Global) April 8 -- China’s economy needs further policy support to achieve the targeted 5.5 percent expansion this year, according to chief economists at major Chinese financial institutions polled by Yicai Global.

Ten of the 17 economists surveyed said that in the current economic environment the government must increase support for the economy to hit the annual growth target. Their average estimate was for a 5.19 percent increase in gross domestic product.

The other seven economists said China can still achieve the 5.5 percent target, which was set when the National People’s Congress convened last month.

China's economy picked up in the first quarter of the year, compared with the fourth quarter of last year, they all agreed. They expect first-quarter growth to come in at 4.49 percent. GDP growth slowed over the course of 2021, ending with a 4 percent increase in the final three months.

Covid-19 has broken out again in China since last month and that has impacted the economy more seriously than the pandemic did during the whole of last year, according to Zhu Baoliang, chief economist at the State Information Center, a state-backed think tank.

The resurgence of Covid-19 is expected to have dragged down China's economic growth by 0.3 percentage point last year, Zhu said.

The steps cities have taken to control the contagion’s spread will definitely hit economic growth, especially in the service sector, said Zhou Xue, senior China economist at Mizuho Securities. So the central bank needs to bring out more relief measures, she added. 

There are external problems too. If the Russia-Ukraine conflict lasts for more than three months, global economic growth may slow by 0.5 to 1 percentage point this year, Zhu added. Meanwhile, the figure for China could be shaved by 0.2 point, he added.

Measures are needed to help small businesses. The government should adjust its policies mainly to stabilize employment and operations at small and mid-sized companies, said Li Wenlong, chief economist at the Pan-Asia Research Institute of Digital Economy. It should boost support for SMEs in terms of finance, tax, and subsidies to stabilize employment and ensure residents' basic incomes, Li said.

The SIC's Zhu also suggested that the government improve the business environment for businesses and roll out regulatory policies for major industries to stabilize market expectations. Meanwhile, it needs to loosen monetary policy appropriately by cutting the reserve requirement ratio and interest rates while stabilizing the property market and infrastructure investment, he added. 

China needs to introduce more active policies to stimulate demand, according to Liang Zhonghua at Haitong Securities. Considering the current relatively loose fiscal policy, the government is expected to enhance its support for infrastructure projects and introduce more active policies in the real estate sector to ensure the “positive cycle and healthy development” of the economy, Liang added.

Editors: Tang Shihua, Emmi Laine, Xiao Yi