China’s economy grew 7.5 per cent in the second quarter, its slowest pace in a year, though data from the National Bureau of Statistics on Monday revealed that resilience in the domestic sector helped offset a decline in the rate of expansion in the export-oriented industrial sector.
The figure adds to fears of an intensifying slowdown in the world’s second biggest economy, and compares with 7.7 per cent growth in the March quarter.
Last year, China’s gross domestic product (GDP) grew by 7.8 per cent, the lowest growth rate in more than a decade.
Growth in the first six months of the year came in at 7.6 percent, the bureau said.
Zhiwei Zhang, an economist with Nomura International in Hong Kong, said the 7.5 per cent growth figure was “in line with market and our expectations”.
Bank of America Merrill Lynch predicted that GDP growth could slide further, spurring the premier, Li Keqiang to intervene.
“We expect Premier Li’s cabinet to introduce some fiscal expansionary policies on a limited scale to arrest the slowdown and the 7.5 per cent annual GDP growth target,” it said in a note signed by economists Ting Lu, Xiaojia Zhi and Robbie Li.
Bank of America Merrill Lynch economists expect Li to try to hit the 7.5 per cent growth target for 2013, “and will very likely lower (the) growth target to seven per cent for 2014”.
They predicted that the central government would move to arrest the slowdown over the next couple of quarters.
They said Beijing might ease the spending burden of local governments by shouldering more of the load, which meant that monetary policy would remain prudent.
Rather than directly stimulating manufacturing, Li’s cabinet was emphasising infrastructure and cutting pollution. “We believe these two strategies are understandable as they could help stabilise growth without worsening distortions and increasing leveraging,” they said.
Concern is mounting over the state of the world’s second largest economy, with interbank rates surging last month because the People’s Bank of China refused to ease monetary policy.
The new leadership has made it clear that it wants to see the Chinese economy evolve to a more consumer-driven market, rather than focusing solely on export growth. It’s also more reluctant to resort to the kind of large-scale stimulus packages like the four trillion yuan it spent to shield China from the worst of the global financial crisis.
Late last month, Chinese President Xi Jinping made it clear that officials could no longer expect praise just for achieving growth targets.
The government released data last week showing that exports in June fell 3.1 per cent year-on-year. The market had exports to grow by 4 per cent.
Separately, Premier Li last week emphasised the importance of reform -- but he also mentioned the importance of stabilising growth.
The National Bureau of Statistics also said China’s real estate investment rose 20.3 per cent in the first half of 2013 from the same period a year earlier, while revenues from property sales in the country rose 43.2 per cent.
The rise in investment compares with an increase of 20.6 per cent in the first five months, while the increase in revenue compares with a 52.8 per cent rise in January to May.
It also said industrial production rose 8.9 per cent in June year-on-year, from 9.2 per cent previously.
Industrial production, which measures output at factories, workshops and mines and is a key indicator for the world’s second-largest economy, also increased 9.3 per cent during the first six months of this year, the National Bureau of Statistics said.
It also said retail sales rose 13.3 percent in June compared with the same month last year. Retail sales, a key indicator for consumer spending in the world’s second-largest economy, rose 12.7 percent during the first six months of this year.
Zhang said industrial production slowed slightly more than expected in June, but retail sales had rebounded, exceeding market expectations.
Additional reporting from Agence France-Presse, Reuters