China vows timely policy measures to cope with economic risks

China will roll out tools in its policy reserve in a timely way to cope with more economic challenges, as Covid-19 outbreaks and risks from the Ukraine crisis pose a threat to employment and price stability, a state planner official said on Tuesday.

Activity in the world’s second-largest economy is beginning to recover after widespread Covid-19 lockdowns in April and early May throttled growth, recent data has shown, but headwinds such as a property market downturn, weak consumer spending and the risk of more Covid outbreaks persist.

The government will implement its existing support measures while improving its policy toolbox, Ou Hong, deputy secretary general at the National Development and Reform Commision, told a news conference. New policy support, depending on the circumstances, can be rolled out in a timely manner, he said.

“We are fully confident of overcoming the difficult challenges in economic operation and we have the ability to cope with all kinds of unexpected changes to ensure stable, healthy and sustainable economic development,” Ou added.

Ou acknowledged that Covid-19 outbreaks and the Ukraine crisis since March have threatened to undercut growth and driven up unemployment and inflation.

Zhao Chenxin, a vice director at NDRC, told the same briefing that China would not resort to flood-like stimulus, a stance the government has reiterated in past years due to debt concerns.

China’s monetary policy will continue to be accommodative to support economic recovery, People’s Bank of China Governor Yi Gang was quoted by state media as saying on Monday.

In May, China’s cabinet announced a slew of measures covering fiscal, financial, investment and industrial policies to wrestle with the Covid-induced damage to its economy.

The policies underscore the government’s determination to prop-up its economy, but analysts say a 5.5% target for growth will be hard to achieve if China sticks with its costly zero-Covid containment strategy.