* China economy set for H2 pick-up as policies gain traction
* Industry still facing downward pressure at home and abroad
* Latest Reuters poll forecasts 2012 growth of 8 pct
BEIJING, July 25 (Reuters) - China's economic growth will
likely pick up in the second half of 2012 as a raft of policies
rolled out to boost economic activity gain traction, the
Ministry of Industry and Information Technology said on
Wednesday.
However, the ministry warned the world's No 2 economy still
faces severe challenges at home and abroad and that authorities
should not underestimate the impact on the corporate sector from
slowing demand.
"We can see relatively clear signs from the industry sector
that the economy is stabilising," Zhu Hongren, the ministry's
chief engineer, told a news conference.
"But we still need to bear in mind that the foundation of
stability in the industry sector is fragile and the downward
pressure is still with us," Zhu said.
Beijing has followed a programme of policy "fine-tuning"
since the autumn of 2011, cutting interest rates, easing rules
on bank lending, fast-tracking fiscal spending and cutting taxes
and red tape for business.
The policy response has left the world's second-biggest
economy on course for a soft landing, according to a new report
from the International Monetary Fund published on Wednesday, but
still facing downside risks from stiffening global headwinds and
potential spillover effects if Europe's debt crisis deepens.
China's economy expanded at its slowest pace in more than
three years in the second quarter of 2012, growing 7.6 percent
from the same period a year earlier - just a whisker above the
official government target for the year of 7.5 percent.
Quarter-on-quarter, the data showed a sequential
improvement, as did a clutch of accompanying indicators, though
the economy remains on course for its lowest full year of growth
since 1999.
The latest benchmark Reuters poll forecasts China's growth
to hit 8 percent for the full year, down from the 8.4 percent
market consensus three months earlier.
China's flash factory purchasing managers index rose in July
to its highest level since February, boosted by a pick up in
output and signs of improvement in new export orders that
offered relief to struggling financial markets.
Still, the HSBC Flash China manufacturing purchasing
managers index (PMI) released on Tuesday showed activity shrank
for the ninth month in a row, while the employment sub-index
fell to a 40-month low.
Analysts polled by Reuters earlier this month expect one
more cut to interest rates of 25 basis points and 100 bps of
cuts to banks' required reserve ratios by the end of the year.