China will introduce more economic stabilisation incremental policies to accelerate economic recovery

China will continue to adopt a series of incremental policies to further consolidate and accelerate its economic recovery from COVID-19 in the latter part of this year, economists said.

"It is estimated that apart from recently launched quasi-fiscal policy instruments, the Chinese government will provide additional fiscal funds worth about 1.5 trillion yuan ($222 billion) in the second half. The channels for capital replenishment include the issuance of local government special bonds, submission of increased profits of State-owned enterprises and revitalization of existing funds," said Yu Xiangrong, China chief economist at Citigroup.

Yu emphasized that infrastructure investment is becoming a strong foothold for China to stabilize growth. As traditional infrastructure is still underdeveloped and has weak links due to its unbalanced growth, industrial upgrade and transitions to cleaner, greener energy need large-scale "new infrastructure" investment.

"The government will comprehensively broaden infrastructure financing through channels like fiscal policies and policy banks. We expect that China's full-year infrastructure investment will increase by 7.7 percent year-on-year, up from 0.4 percent last year, and the growth rate will remain at around 5 percent in 2023," he said.