China has the capabilities and confidence to tackle economic problems and meet the country's annual growth target of around 5 percent this year, the country's top economic regulator said on Thursday.

Although the broader economy is facing pressure from mounting negative factors from the external environment, lack of effective domestic demand and lingering risks in key sectors, China still enjoys favorable conditions and positive factors supporting economic recovery in the second half, said Zhao Chenxin, deputy head of the National Development and Reform Commission.

"We still have plenty of room to step up countercyclical policy adjustment," Zhao said at a news conference in Beijing on Thursday.

"With a series of stimulus policy measures taking effect gradually, the foundation for economic recovery will be further consolidated. We have the conditions, capabilities and confidence to overcome economic problems, deal with challenges from economic transitions and achieve the annual growth target."

The latest economic data showed a mixed picture of a stabilizing economy. Media group Caixin said on Thursday the Caixin China General Manufacturing Purchasing Managers' Index fell to 49.8 in July from 51.8 in June, while data from the National Bureau of Statistics showed on Wednesday that the official manufacturing PMI stood at 49.4 in July, down from 49.5 in June.

Both figures are below the 50-point mark that separates growth from contraction.

Meanwhile, Caixin said sentiment in the Chinese manufacturing sector remained positive in July, with the level of confidence rising from June's low. Firms were optimistic that business development efforts and the launch of new products can help to drive sales in the year ahead.

"The most prominent issues are still insufficient effective domestic demand and weak market optimism," said Wang Zhe, senior economist at Caixin Insight Group. "Policy efforts should focus on stabilizing growth, boosting employment, safeguarding people's livelihoods, intensifying policy stimulus measures, ensuring effective implementation of previous policies and unleashing market vitality."

Experts said the latest key meetings suggest that policymakers will likely mull new incremental policies in the second half, which will significantly help boost market confidence and drive a steady economic recovery for the rest of the year.

"With stepped-up macroeconomic policies, more reform measures underway and the ongoing efforts to drive innovation-driven development, China will further boost its internal driving force, gain more competitive edges and further unleash the potential of domestic demand," said Guo Chunli, director of the Chinese Academy of Macroeconomic Research's Economic Research Institute.

"We are capable of achieving the annual economic and social development goals this year," Guo told a macroeconomic situation symposium in Beijing on Thursday.

A State Council executive meeting held on Wednesday emphasized the need to optimize and strengthen macroeconomic policies, and called for efforts to better implement existing policies and mull new incremental policies.

The Political Bureau of the Communist Party of China Central Committee held a meeting on Tuesday to analyze the country's economic performance. The meeting pledged to step up macroeconomic support in the second half, with a greater focus on expanding domestic demand, cultivating emerging sectors and further widening opening-up, in a bid to meet the nation's annual growth target for 2024.

Wu Peizhi contributed to this story.