China’s GDP steady at 6.7% in Q2
Print Edition
CHINA managed to sustain a 6.7 percent growth year on year for its economy in the second quarter on stronger-than-expected activities in June, but economists warned of headwinds in the second half of the year as private investment is set to weaken.
The second quarter growth rate was flat from the first quarter, the National Bureau of Statistics said yesterday.
The reading beat market expectations of 6.6 percent, according to a Bloomberg News poll.
The service sector grew 7.5 percent year on year in the first half, accounting for 54.1 percent of the overall economy, up 1.8 percentage points from a year earlier.
The primary industry added 3.1 percent, and the secondary industry rose 6.1 percent.
Industrial output surged 6.2 percent year on year in June, accelerating from a 6 percent increase in May.
Retail sales jumping 10.6 percent, faster than May’s 10 percent growth.
However, fixed-asset investment slowed further to 9 percent for the January-June period.
“Within the three economic drivers (exports, investment, consumption), consumption contributed 73.4 percent of the economic growth, 13.2 percentage points more than the same period of last year,” said Sheng Laiyun, spokesman for the bureau. “Domestic demand remained the decisive factor in supporting China’s stable economic growth.”
But he warned of huge downward pressure on the economy as the pain from domestic economic transformation will last and global economic recovery seems weaker than expected, weighing on world trade.
Julia Wang, HSBC economist, said the slowdown in private investment threatens the economic outlook in the second half.
“With near-term worries subsiding for now, we are more concerned about the continued slowdown in private sector investment and the implication for the medium term,” Wang said.
She said private investment is not growing as in late 2015 when it grew 10 percent.
“Accounting for over 60 percent of total investment, the slowdown in private-sector investment puts an increasingly large burden on public, mostly infrastructure, investment.”
She said the slowdown reflects deterioration of business confidence in the private sector.
“The government should move faster to shut down and restructure inefficient state-owned enterprises. Some progress has been made so far, but we think the government can afford to move much faster,” Wang added.
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