Premier Li Keqiang stressed the mainland's need to stabilise economic growth and push forward with structural reforms when meeting multinational business leaders in Dalian yesterday before the World Economic Forum, which opens today.
Recent economic data, including industrial output and power usage, showed a recovering trend, Li said. "The most prominent problem or pressure comes from the need to ensure adequate employment. The government will adopt active policies to boost jobs, and such policies must be carried out under the condition of stable economic growth."
Li said the government would not rely on macroeconomic adjustments such as increasing the fiscal deficit and loosening money supply when faced with downward pressure on the economy because they "may achieve some impact in the short term but not necessarily help development in the future".
He said Beijing was, instead, determined to release market dynamics through reforms.
Industrial production growth hit a 17-month high last month, driven by an acceleration in fixed-asset investment, consolidating a rebound in economic activity and showing that Beijing's mini-stimulus has paid off.
Encouraging production, investment and exports data has increased the odds that economists will be more upbeat when they revise their growth forecasts, although some still have doubts.
Data yesterday showed industrial production grew 10.4 per cent year on year last month, the fastest rate since March last year and up from 9.7 per cent in July. The main driver was a 32 per cent increase in infrastructure investment, from July's 22.8 per cent growth.
The H-shares index is poised to enter a bull market after advancing 20 per cent from its June 25 low as banks from JP Morgan Chase to Goldman Sachs upgrade growth projections for the economy following the spate of good data.
Central bank data released yesterday showed growth in outstanding yuan loans remained modest last month at 14.1 per cent, the slowest pace since 2006, following July's 14.3 per cent growth. But a rise in corporate bond issuance and commercial bills pushed total social financing to 1.57 trillion yuan (HK$1.98 trillion), nearly double the 809 billion yuan in July.
Capital Economics said overall credit growth remained robust, which should sustain strong investment spending for a while. But analysts expressed concern that the rebound had been driven by investment, defying Beijing's goal of consumption-led growth.
Retail sales grew a modest 13.4 per cent year on year last month, compared with growth of 13.2 per cent in July, indicating the pickup in consumption remains lacklustre.
Additional reporting by Bloomberg