(Yicai) July 31 -- China is expected to issue new policies to stabilize growth in the second half of the year around the end of the third quarter, experts predicted after the Political Bureau of the Communist Party of China Central Committee held a meeting to deploy economic work for the rest of the year.

The direction of fiscal policies will be clearer, and ultra-long special treasury bonds, new special bonds, and new policy-based financial tools will be issued at a faster speed in the second half, experts told Yicai.

With the space for looser monetary policy opening up, the People’s Bank of China will act in a timely manner based on the economic situation and use comprehensive aggregate tools, such as the reserve requirement ratio and interest rate cuts, and structural monetary policy tools, the experts noted.

China should accelerate the transformation from traditional to new growth drivers, implement more active fiscal policies and moderately loose monetary policies, give full play to existing policies, launch practical and effective incremental policies, hike efforts in countercyclical adjustments, expand domestic demand, optimize supply, guarantee and improve people’s livelihoods, enhance the driving force for development, and stimulate social vitality, the Politburo said at a meeting yesterday.

There is a certain upward trend in the year-on-year consumption and investment growth in the second half of this year, considering the low base number a year ago, Wang Qing, chief macro analyst with Golden Credit Rating International, told Yicai. The main factors underpinning the economy in the second half will still be the strength of consumption and investment activities.

To successfully achieve its annual economic growth target and reverse the downward economic trend since the second quarter, China must hike countercyclical adjustment efforts in the second half, Wang suggested.

Policies will focus on accelerating fiscal expenditures and the issuance and use of government bonds in the short term, speeding up the implementation of CNY800 billion (USD118.6 billion) in new policy-based financial tools to help investment stop falling and stabilize, Wang said.

Monetary policies will focus on further promoting the supportive role of various structural tools in areas such as technology and inclusive finance, and on continuously promoting the transformation from traditional to new growth drivers and stabilizing the overall employment situation, he added.

Once these existing policies take full effect, China will likely launch some practical and effective incremental policies around the end of the third quarter, Wang forecast. They may include issuing government bonds to promote consumption and stabilize investment, lowering RRR and interest rates, and implementing structural monetary policy tools, such as increments and expansions.

The message from the Politburo meeting indicates that monetary and fiscal policies will adopt a more proactive and powerful combination of tools to stimulate domestic demand in the second half, Pang Ming, member of the China Chief Economist Forum, told Yicai.

The actual effect of fiscal policies is a key variable determining the economic resilience within this year, said Xiong Yuan, chief economist at Guosheng Securities.

Meanwhile, the short-term focus will still be on making good use of existing policies, especially promoting the implementation of government bonds and policy-based financial tools at a faster speed to form quantities of physical works as soon as possible, he added.

Editor: Futura Costaglione