Short-term policies could stabilise China’s slowing economy in the second half of this year, but for growth to make a lasting recovery, Beijing should foster new sectors and innovation, a government think tank’s chief economist was reported as saying on Saturday.

China’s growth trajectory will be “L’’ shaped, rather than “V’’ shaped, and it is difficult to predict when the world’s second-largest economy will rebound, Fan Jianping, chief economist at the State Information Centre, told the official China Securities Journal.

M2 money supply

Broad M2 money supply (M2) only rose 10.1 per cent by the end of April from a year ago, missing market expectations of 12 per cent, leaving significant room for continued loosening of monetary policy, including lowering the interest rates and relaxing the reserve requirement ratio (RRR), he added.

China’s central bank has now cut interest rates and RRR five times in six months to stoke an economy that is set for its worst year in a quarter of a century.

The think-tank forecast in early May that China’s economic growth is expected to slow further to 6.8 per cent in the second quarter from a six-year low in the first quarter.

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