China's economy is showing signs of strengthening recovery momentum thanks to a raft of supportive policies and structural shifts, while further progress will hinge on reinforcing domestic demand and enhancing targeted policy execution, said a renowned economist.

Liu Qiao, dean of Peking University's Guanghua School of Management, said in an exclusive interview with China Daily that he was "relatively confident that China will likely hit its around 5 percent growth target this year".

"The economy began stabilizing in the fourth quarter last year, and the upward momentum has been gaining strength," Liu said, attributing the rebound to a combination of proactive fiscal policy, moderately accommodative monetary policy, and policy tools focused on stimulating demand and consumption.

While acknowledging continued global uncertainties — especially amid US-China trade tensions — Liu expressed a relatively optimistic view about China's economic prospects over the short, medium, and long term.

"I'm not particularly pessimistic about China's economic prospects," he said. "We are seeing some positive structural forces at play, especially in technological innovation and industrial upgrading, which are beginning to show strong vitality after years of efforts. And the services sector is also demonstrating growing dynamism."

Looking into the second half of the year, Liu said that "bold attempts" in fiscal policy could hold the key to addressing weak consumer confidence.

New policy tools worth considering in the second half, Liu said, include fiscal transfers or cash subsidies for low-income groups, broadening consumption incentives beyond traditional big-ticket items to everyday spending and services, and greater central government support for fertility and childcare.

"With proactive fiscal measures — such as the issuance of special central government bonds or a modest increase in the fiscal deficit with spending focused on boosting consumption, China is well-positioned to meet its full-year growth target," Liu said.

He said China's macroeconomic policy stance — a more proactive fiscal policy and a moderately accommodative monetary policy — was clearly set earlier this year and is expected to continue through the second half, and the key lies in how to put into place the policy stance with rollout of additional, innovative policy tools.

On the investment front, Liu said that fiscal support can play an active role in addressing the pressure of rising receivables on corporates, especially listed firms, and in resolving the "triangular debt" — a chain of unpaid obligations among firms. This, he said, would improve corporate cash flow and strengthen investment appetites.

Despite short-term headwinds, Liu remains bullish on China's long-term economic prospects. "China is still among the world's top destinations for foreign investment, with a complete industrial system, comprehensive manufacturing capabilities and a huge population that offers enormous consumption potential."

As technological shifts like AI and digital transformation reshape the economy, Liu sees China's size and industrial structure as key assets. "China can provide large-scale industrial application scenarios for new technologies. This makes it hard for any global investor to ignore its potential."

Roy Jakobs, CEO of Dutch health tech firm Royal Philips, said the company remains optimistic about China's economic prospects.

Jakobs pointed to signs of stabilization in the Chinese economy, supported by the recovery in consumer activity. "We see consumer confidence and consumer spending rising, which is really encouraging."

The National Bureau of Statistics said China's retail sales grew 6.4 percent year-on-year in May compared with a 5.1 percent rise in April, making it the fastest pace since late 2023.