Premier encourages innovation

Although downward pressure on the economy may persist for a while, the Chinese government has plenty of policy room and options to achieve its annual growth targets, the country's top economic planner said in a statement on Tuesday.

Qu Hongbin, chief economist in China at HSBC Holdings, said that the PMI index's focus on the export-oriented sectors had been the biggest reason behind its decline in recent months.

"The implication for domestic demand is therefore less clear," he said. "Growth will therefore need to be more domestically driven."

Qu said that there have actually been some signs of cyclical recovery in the property market in the past few months. Meanwhile, both funding conditions and the project pipeline are improving for infrastructure investments.

"The combination of a cyclical recovery in the property market and acceleration of infrastructure investment should lay the groundwork for a modest rebound toward year-end," he added.

Economists expect further monetary and fiscal easing in the fourth quarter to maintain a fast pace of growth, including further cuts in the bank's reserve ratio and accelerated municipal bond issuances.

Xinhua contributed to this story.