BEIJING (Reuters) - China will take more forceful and effective measures to support market confidence, state media CCTV reported on Monday, citing a cabinet meeting, following a plunge in Chinese shares.
The world's second-biggest economy faces multiple challenges including a weak housing market, sluggish demand, deflationary pressures and geopolitical uncertainties - factors that have weighed on the stock market in recent days.
"China will consolidate and strengthen the upward trend of the economic recovery and promote the stable and healthy development of the capital market," CCTV reported, citing the cabinet meeting held on Monday, chaired by Premier Li Qiang.
China will also increase mid and long-term capital into the market and strengthen the "internal stability" of the market, state media added.
The country's blue-chip CSI300 Index on Monday dropped 1.6% to its lowest closing level in nearly five years, while the benchmark Shanghai Composite Index posted its biggest one-day drop since April 2022, falling 2.7%.
As equities slid, major state-owned banks moved to support the Chinese yuan by tightening liquidity in the offshore foreign exchange market while actively selling U.S. dollars onshore, Reuters reported on Monday, citing people familiar with the matter.
China's economy grew 5.2% last year, slightly more than the government's official target, but the recovery was far shakier than investors had expected.
Economists polled by Reuters expected China's economy to grow 4.6% this year.