China Vows to Achieve Annual Growth Target After Economy Weakens

(Bloomberg) -- China's cabinet pledged to ensure the country will meet its full-year economic goal and to forge ahead with implementing policies, after growth slipped below the official target range in the second quarter.

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A State Council executive meeting chaired by Premier Li Qiang said "the efficient use of fiscal funds should be maximized," according to a Xinhua News Agency readout on Monday. Markets generally expect the government to accelerate spending and step up investment in infrastructure projects to make sure growth stays on track.

Officials were meeting days after authorities revealed China's economic growth unexpectedly weakened last quarter to 4.3% from a year earlier, below the 4.5% to 5% target range. A slowdown in public spending was a key factor contributing to the slowdown.

The guidance provided in the readout signaled the importance of a 7 trillion-yuan ($1 trillion) "Six Networks" program, a key infrastructure project that involves the construction of data centers and underground pipelines.

The meeting listened to a report on its progress, concluding that its planning and construction "should be systematically promoted, implemented quickly according to local conditions and industry needs, and financial resources should be strengthened to ensure the successful construction of major infrastructure networks."

A less restrictive fiscal stance would mark a reversal for China after its cumulative budget deficit narrowed in May for the first time in more than two years. The restraint amounted to a de facto austerity policy that's done little to relieve pressure on the economy from feeble domestic demand.

A turning point may come soon, as provinces are nearing a milestone in Beijing's plan to refinance their crushing debts, which could allow local officials to refocus efforts on raising funds for infrastructure projects.

The cabinet meeting also discussed audit work conducted in order to monitor central government budget execution and other fiscal expenditure and income. Officials pledged to strengthen budget management and deepen fiscal reforms, saying they are "seriously treating the problems identified in the audits."

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