New | Beijing rolls out fresh support amid slowing growth

The mainland's top policymakers pledged to offer fresh credit support to small firms and drive reforms to spur the economy amid expectations that growth in 2014 fell below target for the first time in 16 years.

The pledges came as overseas investment was rapidly closing its gap with foreign spending in China, which will "make China a net investor in no time, marking a historic turning point", Vice Commerce Minister Zhong Shan yesterday.

The mainland economy is facing both favourable structural changes, including an expanding services sector and accelerating outbound investment, and also challenges, such as a weak property market, overcapacity, and rising default risks.

Outbound investment surged 14.1 per cent to a record US$102.9 billion in 2014, while foreign direct investment growth cooled to 1.7 per cent at US$119.56 billion, the weakest in two years, the ministry said. FDI in the services sector achieved 27 per cent growth, offsetting a 4.1 per cent drop in investment in mining.

The Chinese leaders have refrained from any strong credit stimulus to spur growth, under what is dubbed a "new normal" for the economy, whose expansion may have slipped below 7.5 per cent last year after averaging at 10 per cent over the past decade. An unexpected fall in new yuan loans last month was a clear sign of sluggish demand as the factory sector faced deflation for 34 months in a row.

The People's Bank of China said on Thursday its monetary policy would stay prudent, with a focus on pursuing an "appropriate", neither too tight nor too loose, tone. It was a reiteration from the pledge made at the Central Economic Work Conference in December, which set guidelines for the 2015 policies.

Tim Condon, ING's chief economist for Asia, said monetary policy had become "appropriately elastic", the new name for "prudent" policy, with a bias toward accommodation, which may bode well for Chinese equities.