The Chinese authorities are planning stronger macro policies to shore up the economy and keep employment stable as the latest data on industrial output, retail sales and investment showed across-the-board contraction in the first two months due to the novel coronavirus disease (COVID-19).

The value-added industrial output, an important economic indicator, fell 13.5 percent year on year during the January-February period. Fixed assets investment went down 24.5 percent, while retail sales of consumer goods dropped 20.5 percent, according to the National Bureau of Statistics (NBS).

Early epidemic control efforts by the government had kept most people indoors and factories, shops and restaurants shut. It proved key to the anti-virus battle but also resulted in disruptions in economic activities and supply chains.

But the impacts are largely "short-term, external and controllable," NBS spokesperson Mao Shengyong said at a press conference on March 16.

As the spread of COVID-19 has been basically contained, China's improving economic fundamentals and the trend of upward momentum in the long term have not changed, Mao said. He cited the scale of the economy, its strong resilience, Internet-powered new drivers and flexible macro policies as among the major factors underpinning growth.

"The economy has withstood the shocks of the epidemic," he said.

Given that businesses have quickened pace to resume normal operations, the NBS projects economic activities will see visible recovery in March and the second quarter as the impacts gradually weaken.

On the outlook for the second half of the year, the forthcoming stronger macro policies will put the economy on a steadier footing, he said.

Facing potential economic shocks due to the epidemic, the financial authorities have said they would pay more attention to policy flexibility to maintain reasonably sufficient liquidity and release the potential of the loan prime rate reform.

Starting from March 16, the central bank implemented targeted reserve requirement ratio (RRR) cuts for eligible banks, the second such cut this year, to release another 550 billion yuan ($78.6 billion) of liquidity into the market.

Other policy moves include issuing special reloans to provide preferential interest rate credit support to enterprises and floating special bonds to provide sufficient funds to commercial lenders to support smaller enterprises.

On the fiscal side, the Ministry of Finance has allocated quotas for new local government bonds ahead of schedule and rolled out tax and fee cuts for the hard-hit sectors.

"Overall, the government debt levels remain relatively low...and there is room for raising the budget deficit," Mao said.

Asian financial services group Nomura expects more financial relief and policy easing measures in the coming months, including further liquidity injections through channels like medium-term lending facility and RRR cuts.

Data on March 16 also showed that China's job market remained generally stable in February, with the surveyed unemployment rate in urban areas at 6.2 percent, up 1 percentage point from the previous month. It is set to improve as enterprises restore production.

This is an edited version of an article published by Xinhua News Agency

Copyedited by Sudeshna Sarkar

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