Slowing growth to test China's reform efforts
By Wang Yanlin |
July 16, 2013, Tuesday
|
Print Edition
Print Edition
China's economic growth eased further to 7.5 percent in the second quarter from the increase of 7.7 percent in the first three months, reflecting a weakening recovery that may put the government's efforts on reform to the test.
The country's gross domestic product expanded to 24.8 trillion yuan (US$4 trillion) in the first half, up 7.6 percent from a year earlier, the National Bureau of Statistics said yesterday.
The pace of growth has moderated for two consecutive quarters, failing expectation of a mild recovery and triggering concerns of whether China can fulfill its own growth target of 7.5 percent for this year, analysts said.
Sheng Laiyun, a bureau spokesman, said economic performance was stable on the whole as the country beefed up economic restructuring efforts and reform amid external uncertainties.
"Although China's growth slowed a bit, we should see the improvement in growth quality that benefits our long-term development," Sheng said.
China's agriculture strengthened in the first six months as summer rice production increased 1.5 percent, modern services and other strategic industries continued to grow strongly while manufacturing was moving toward higher-end, more innovative and more environment-friendly products, Sheng said.
Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd, said the figure was not surprising, but added to signs of downward pressure on the economy.
"The slowing growth was mainly dragged by declining industrial production, and worsening export conditions," Zhou said. "We believe China is to grow at around 7.6 percent this year with inflation falling to a range of 2.5 percent to 3 percent this year."
Industrial production expanded 9.3 percent year on year during the January-June period, down 0.2 percentage points from that in the first three months, the statistics bureau said.
Fixed-asset investment added 20.1 percent to 18.1 trillion yuan, compared to the pace of 20.9 percent in the first quarter.
Retail sales rose 12.7 percent, accelerating 0.3 percentage points from that in the first three months.
Meanwhile, the Consumer Price Index, the main gauge of inflation, edged up 2.4 percent in the first half, well under the government limit of 3.5 percent.
Zhou said some downside risks remained, including growing unemployment pressure, the possibility that high money market rates and deleveraging by commercial banks may spill over to the manufacturing sector, and the fragile local government financing platform.
To head off such risks, Zhou said the government will need to take prompt policy actions, such as cutting interest rates to reflect rapidly changing domestic and external conditions.
However, Yao Wei, an economist at Societe Generale, said there were unlikely to be any immediate policy moves as the degree of deceleration was probably still acceptable.
"The government's tough-love stance will not be easily swayed, at least not by this latest set of data," Yao said. "We continue to see a limited chance of any significant monetary easing or infrastructure stimulus in the near term, and so economic growth is expected to step down further in the second half."
Asked what was the minimum tolerable growth for China, Sheng said there was no fixed number, and that the government would stick to reform efforts to sustain growth in the longer term.
The country's gross domestic product expanded to 24.8 trillion yuan (US$4 trillion) in the first half, up 7.6 percent from a year earlier, the National Bureau of Statistics said yesterday.
The pace of growth has moderated for two consecutive quarters, failing expectation of a mild recovery and triggering concerns of whether China can fulfill its own growth target of 7.5 percent for this year, analysts said.
Sheng Laiyun, a bureau spokesman, said economic performance was stable on the whole as the country beefed up economic restructuring efforts and reform amid external uncertainties.
"Although China's growth slowed a bit, we should see the improvement in growth quality that benefits our long-term development," Sheng said.
China's agriculture strengthened in the first six months as summer rice production increased 1.5 percent, modern services and other strategic industries continued to grow strongly while manufacturing was moving toward higher-end, more innovative and more environment-friendly products, Sheng said.
Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd, said the figure was not surprising, but added to signs of downward pressure on the economy.
"The slowing growth was mainly dragged by declining industrial production, and worsening export conditions," Zhou said. "We believe China is to grow at around 7.6 percent this year with inflation falling to a range of 2.5 percent to 3 percent this year."
Industrial production expanded 9.3 percent year on year during the January-June period, down 0.2 percentage points from that in the first three months, the statistics bureau said.
Fixed-asset investment added 20.1 percent to 18.1 trillion yuan, compared to the pace of 20.9 percent in the first quarter.
Retail sales rose 12.7 percent, accelerating 0.3 percentage points from that in the first three months.
Meanwhile, the Consumer Price Index, the main gauge of inflation, edged up 2.4 percent in the first half, well under the government limit of 3.5 percent.
Zhou said some downside risks remained, including growing unemployment pressure, the possibility that high money market rates and deleveraging by commercial banks may spill over to the manufacturing sector, and the fragile local government financing platform.
To head off such risks, Zhou said the government will need to take prompt policy actions, such as cutting interest rates to reflect rapidly changing domestic and external conditions.
However, Yao Wei, an economist at Societe Generale, said there were unlikely to be any immediate policy moves as the degree of deceleration was probably still acceptable.
"The government's tough-love stance will not be easily swayed, at least not by this latest set of data," Yao said. "We continue to see a limited chance of any significant monetary easing or infrastructure stimulus in the near term, and so economic growth is expected to step down further in the second half."
Asked what was the minimum tolerable growth for China, Sheng said there was no fixed number, and that the government would stick to reform efforts to sustain growth in the longer term.
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