China’s GDP expanded 7.5 percent in the second quarter, official data showed yesterday, a second consecutive slowdown in growth as worries mount over the health of the world’s No. 2 economy.
While the figure is in line with a median forecast of 10 economists by Agence France-Presse, it follows a series of weak numbers pointing to trouble in the Asian giant and fuels concerns it could miss the government’s growth target for this year.
Growth in the first six months of the year came in at 7.6 percent, the National Bureau of Statistics said. A spokesman said that the performance in that period was “generally stable” and within expectations.
“However, we are still faced with grim and complicated economic situations,” he said.
Growth in the first three months of the year was 7.7 percent, a decrease from the 7.9 percent recorded in the final quarter of last year.
This year’s figures have so far proved disappointing after the 7.8 percent seen last year, the worst in 13 years.
“As of now, China’s GDP has been staying under 8 percent for five straight quarters, a clear sign of distress,” economist Ren Xianfang (任現芳) of IHS Global Insight said.
“The rather sharp growth deceleration and the recent financial market turmoil indicate that risks have been building on both the financial and real goods sector,” she said.
Adding to uncertainty are worries about China’s financial system, which was rocked last month when the interest rates banks charge each other surged to record highs.
“The liquidity crunch has exposed the extreme vulnerability of the financial system linked with excessive leveraging through shadow banking, while the GDP data indicate the economy is facing the risk of slowing to a stalling speed,” Ren said.
Bureau spokesman Sheng Laiyuan (盛來運) blamed the latest slowdown on China’s “declining potential productivity,” which he said meant the same investment could no longer generate the same returns as in the past.
Speaking to reporters, he also cited “the international environment that remained complicated and severe,” an apparent reference to weak economic conditions abroad, including Europe which is in recession and struggling with a debt crisis.
The slower growth was also a result of measures taken by the new leadership, which “attaches particular importance on restructuring and retooling the economy,” he added.
Lu Ting (陸挺), Hong Kong-based economist with Bank of America Merrill Lynch, said that while the second-quarter figure was in line with expectations, it could prompt authorities to take a more active hand.
“The government may need to relax on the policy front if it wants to maintain its full-year economic growth target of 7.5 percent,” the economist said.
Markets welcomed the statistics, with the Shanghai Composite Index rising 1 percent at 2,059.39 points. The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 1.4 percent.
The bureau also announced that retail sales rose 13.3 percent year-on-year last month and 12.7 percent during the first half.
Industrial production rose 8.9 percent year-on-year last month and 9.3 percent for the first six months of the year.
Fixed asset investment, a key measure of government spending on infrastructure, rose 20.1 percent during the first half year-on-year.
“Export manufacturers are feeling the pinch from sluggish global demand,” Moody’s Analytics economist Matthew Circosta said in a report.
“The government is also focusing on reforming the economy, which includes the closure of overcapacity in sectors such as steel,” he said.