CHINA will intensify fine-tuning of policies as downward pressure on the economy is still "relatively large", Premier Wen Jiabao said during a tour of Jiangsu province, the official Xinhua News Agency reported yesterday.

Measures implemented since April were showing results and the economic slowdown was stabilising, he said. At the same time, the government would "unswervingly" continue its property controls and prevent prices from rebounding, Xinhua cited Mr Wen as saying in its report.

China announced on Thursday the second cut in benchmark interest rates in a month and allowed banks to offer bigger discounts on loans, stepping up efforts to reverse a slowdown in the world's second-biggest economy. The move, which coincided with the European Central Bank's decision to reduce borrowing costs to a record low, underscores the risks to the global recovery as the euro-area's financial crisis deepens, US employment gains falter and Asian growth slows.

"In April we announced we would put stabilising growth in a more prominent position and intensified efforts to pre-emptively fine-tune policies," Mr Wen said. "Currently, these measures have already seen some results and the economic slowdown has stabilised. The pace of growth is within the expected target zone set at the beginning of the year."

But he warned China still faced downward pressure.

The premier set a target of 7,5% growth this year, down from an 8% goal in place since 2005.

The government would "continue to intensify pre-emptive fine-tuning and implement a proactive fiscal policy, especially with a focus on improving the structural tax reduction policy", he said. Authorities would "continue to implement a prudent monetary policy and effectively solve the structural contradiction between the supply of and demand for credit".

In a report at the weekend, Xinhua said Mr Wen pledged to restrict speculative demand and investment in property and said this must be made a long-term policy. Local governments that introduced or covered up a loosening of curbs on residential property had to be stopped, he said.

China started imposing restrictions on home purchases two years ago as prices surged after the government started a stimulus package to shield the economy from the global financial crisis.

Property controls were still in a "critical period" and the task remained "arduous", Mr Wen said.

Bloomberg