Stable growth was reaffirmed as a priority as were maintaining fiscal and monetary policies to combat turbulent global conditions.

Current economic growth is within expectations, but external conditions remain grim and pose difficulties and challenges, according to a statement released on Tuesday after a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee, presided over by President Hu Jintao.

The statement highlighted the importance of understanding the risks and being fully alert to them, according to Xinhua News Agency.

Weakening demand from Europe and other trade partners have hit China's exports and, combined with a cooling property sector, slowed growth to 7.6 percent in the second quarter, the lowest level in three years.

Economists forecast that the economy will rebound in the second half of the year.

The committee pledged to cut taxes and maintain moderate credit growth.

The government will beef up support for key projects and implement policies that allow private capital to play a bigger role, the committee said, adding that foreign trade policies will remain consistent.

It also vowed to expand domestic demand, develop the real economy, accelerate reform and improve living standards in the second half.

At the same time, the committee said it will firmly implement cooling policies to curb speculative demand and increase supplies of smaller apartments and subsidized housing.

And at a meeting with a number of business leaders and members of democratic parties last week, President Hu called for measures to increase the support of fiscal and monetary policies on the real economy and to expand domestic demand.

Hu also called for more efforts to ensure agricultural production, boost small businesses and stabilize jobs, adding that authorities must remain alert against economic risks and closely monitor the global economy..

And Premier Wen Jiabao said although there are signs of stabilization, the economy still faces "relatively big downward pressures".

The government will further step up policy fine-tuning, to make it more "targeted, forward looking and effective", he said.

China will give a higher priority to maintaining stable economic growth, Wen said.

Further tax cuts will be introduced, value-added tax trials will be expanded and measures implemented to support small businesses, he said.

Wen also said China will encourage steady growth in credit.

The government has cut interest rates twice since early June and reduced bank reserve requirements three times since November.

Some banks have asked their branches to boost lending to local government financing vehicles, the China Securities Journal said citing unidentified sources on Tuesday.

The branches are being instructed to give credit support to roads, railways, natural gas and clean energy projects, it said.

Measures to increase public investment, to be financed largely by credit, will be the most important ones in the near term to aid growth, Wang Tao, a Hong Kong-based economist at UBS AG, said.

Economists have ruled out the possibility of launching a mass stimulus package as authorities did in 2009. However, some local governments have announced stimulus plans, with Changsha last week unveiling an 829 billion yuan ($130 billion) investment plan.

"More local governments may follow suit," said Zhang Zhiwei, chief China economist at Nomura Holdings Inc.

"The local government will need financing from banks to implement projects," he said.

But economists also warned of implementing a broader relaxation of credit. Relaxing control of lending to local governments may cause rising local debt. In 2010, local government debt was up to 10.7 trillion yuan.

Xinhua contributed to this story.

Contact the writer at lanlan@chinadaily.com.cn