Yuan's exchange rate to stay stable at reasonable level
The nation will be able to achieve its GDP growth target this year with more positive factors supporting the real economy, Premier Li Keqiang said during a meeting with officials from Kazakhstan on Tuesday.
Li also said that there is no basis for a continuous depreciation of the yuan and the currency's exchange rate would remain stable at a reasonable level.
China has set a GDP growth target of about 7 percent this year. The country managed to achieve a growth rate of 7 percent in the first half of this year.
The economy is expected to gain momentum in the second half of 2015 due to expected pro-growth measures, a research note from HSBC Holdings Plc said, despite recent market volatility, lackluster manufacturing conditions and the yuan's depreciation.
Qu Hongbin, chief China economist of the London-based HSBC, wrote in the note that the economy will be on track for a modest recovery during the rest of the year, after it slowed to its lowest level since the global financial crisis.
"We maintain our full-year GDP forecast at 7.1 percent," said Qu.
Recent weaker-than-expected factory activity raised concerns about the economy. The Caixin flash China general manufacturing Purchasing Managers Index retreated to 47.1 in August, the lowest reading since March 2009.
A plunging stock market and a weakening yuan added to fears that the government may be running out of policy options.
However, Qu said that policymakers still have sufficient ammunition on both the monetary and fiscal fronts to prop up the economy.
There is ample room for the central bank to roll out more monetary easing measures, he said.
China cut both interest rates and banks' reserve requirement ratio on Tuesday in a bid to boost economic growth.
Fiscal policy also has room to be more supportive, Qu said, citing the current budget surplus, reforms in local government financing and policy banks' re-capitalization.
The untapped policy potential could put China at the top of the list of economies able to pull themselves out of deflation without engaging in "beggar-thy-neighbor" competitive devaluation, Qu said.
