Economy starting to stabilize

China's economy is slowly stabilizing as government efforts to fuel growth are showing effect and inflation continues to moderate as speculative investments have been suppressed due to real estate curbs, head of China's top economic planner said Wednesday.

The government's policies and measures have been taking effect and the country's economic growth is slowly stabilizing, Zhang Ping, minister of the National Development and Reform Commission (NDRC), said at a meeting of the National People's Congress.

Real estate curbs have achieved positive results, with speculative investments effectively checked, he said.

But he warned against a rebound of home prices and vowed to increase supply of small and medium-sized homes to contain prices in the second half of the year.

Inflation has continued to moderate since the beginning of the year due to an improvement in supply and demand balance and decline in prices of some bulk commodities in the international market, he said.

Zhang also attributed the slowdown in consumer price increases to easing food prices.

The country's consumer price index, a major gauge of inflation, rose 1.8 percent in July to hit a 30-month low.

But there will be new pressure on prices in the coming months as the international oil prices are moving up and China's Mid-Autumn Festival and National Day holidays, which fall in September and October, may push demand, and thus, prices of pork, Tang Jianwei, a macroeconomic analyst at Bank of Communications in Shanghai, said in a report Wednesday.

But any rebound in prices this year would not be big, he said.

Zhang's remarks came after a raft of economic data released recently sent mixed signals that some indicators are improving while others such as corporate earnings and exports were deteriorating.

Profits of China's major industrial enterprises dropped 5.4 percent in July from a year ago, the fourth consecutive decline, data released Monday showed.

Exports rose just 1 percent year-on-year in July, down from the 11.3 percent growth in June.

"The economy may not rebound soon even if it touches the bottom, and the downturn will last longer than previously expected," Li Xunlei, chief economist at Haitong Securities, told the Global Times.

"After a decade of economic boom, the economy is now entering a restructuring and correction phase. The period is going to be difficult but the country has to go through it," he said.