BEIJING- Chinese authorities are stepping up efforts to ward off a sharper economic slowdown, analysts said after Beijing called on local governments to speed up their spending over the next month to boost activity.
The finance ministry said on Wednesday that local governments risked losing 2014 budget funds not allocated by the end of June and that spending on some projects could be front loaded to help boost the economy..
The move to accelerate, but not increase, spending follows other steps to underpin the economy after a run of weaker-than-expected data this year raised concerns growth could miss the official forecast for the first time in 15 years. "There is increasing evidence that Premier Li Keqiang is probably more serious about the 7.5 per cent growth target than hoped by those who have wanted the government to tolerate lower growth," analysts at Barclays Capital said in a research note.
Premier Li has said it did not matter if growth was a little below that target. Last week, he said there were relatively big pressures on growth and policy needed to be fine-tuned.
The ministry reiterated that money for key projects must be paid in a timely manner. Some of pressures on the economy stem from sluggish budget spending this year, analysts say. "We must also realise that the current situation we are facing at home and abroad is still complicated and the downward pressure on the economic growth still exists, so we must not underestimate certain difficulties," the finance ministry said.
China's leaders have ruled out any big fiscal stimulus, saying they are committed to structural reforms intended to shift the economy to slower, more sustainable growth.
But they have called for fine-tuning of policy and taken targeted support measures, such as tax cuts for smaller firms and quickening spending on railways and public housing.
"It reinforces our view that policy easing has started to pick up in the second quarter, the size of easing is becoming significant from a macro perspective, and there will likely be more easing measures in the second half if property investment growth slows further," Nomura's China chief economist Zhiwei Zhang said.