China’s economic growth hit 7.5 per cent year-on-year in April-June, official data showed Wednesday, ahead of expectations as the world’s second-largest economy was boosted by government stimulus. The second-quarter figure announced by the National Bureau of Statistics compared with 7.4 per cent in the previous three months and exceeded the median forecast of 7.4 per cent in a survey of 17 economists by AFP.
“Generally speaking, China’s economy showed good momentum of stable and moderate growth in the first half-year,” said NBS spokesman Sheng Laiyun. “However we should keep in mind that the domestic and international economic environment is still complicated and the national economy still faces many challenges.” The NBS also said China’s economy expanded 7.4 per cent in the first half of the year.
The results come after Beijing introduced a series of policies in April in response to concerns over slowing growth, including tax breaks for small enterprises, targeted infrastructure spending and the encouragement of lending in rural areas and to small companies.
Wendy Chen, Shanghai-based economist with Nomura International, said: “A series of policy easing measures have taken effect, and the economy has already bottomed out and recovered.” Growth would be “slightly better” in the second half of the year, she said, but added: “We expect more policy easing in the third quarter, in all aspects including the property sector.”
Despite the short-term stabilising effect of the efforts, which economists have dubbed “mini-stimulus”, some analysts remain pessimistic on the full-year outlook given persistent concerns over the huge but troubled property sector. China’s economy grew 7.7 per cent in 2013, the same as 2012, which was the worst pace since 7.6 per cent in 1999. For full-year 2014, the median forecast in the AFP survey is for an expansion of 7.3 per cent — down from 7.4 per cent in the last quarterly poll three months ago.
If realised, 7.3 per cent growth would be the weakest annual performance since the 3.8 per cent of 1990. China in March set its annual growth target for this year at about 7.5 per cent, the same as last year. The objective is usually set conservatively so as to ensure being met. The last time China missed the target was in 1998, during the turmoil of the Asian financial crisis.
Officials including Premier Li Keqiang earlier this year emphasised that the goal was flexible — widely seen as a hint it may not be realised. But last month, Li called achieving it the “inescapable responsibility” of local governments and urged “no delay” in action, an indication of concern.
China’s leaders consistently say that slower growth is good for the country as they try reduce decades of over-reliance on the huge though often inefficient investment projects that have girded expansion. They envision a new model in which the country’s increasingly affluent consumers drive activity, generating slower but more sustainable growth in the long run.
Economists expect refinements to the limited stimulatory efforts to continue in the form of “targeted” steps, though they differ on whether authorities will go so far as cutting interest rates or reserve requirement ratios for all banks. Separately, the NBS said China’s industrial production, which measures output at factories, workshops and mines, rose 9.2 per cent year-on-year in June.
Retail sales, a key indicator of consumer spending, increased 12.4 per cent in the same month, while fixed asset investment, a measure of government spending on infrastructure, rose 17.3 per cent on-year in the first six months.
Source : Channel News Asia | July 16, 2014