China Q2 Economic Growth Disappoints

(RTTNews) - China's economic growth missed expectations in the second quarter on weaker consumption and property market downturn, suggesting that more policy measures are needed to achieve the official growth target this year.

Gross domestic product expanded 4.7 percent on year in the second quarter, the National Bureau of Statistics said on Monday.

That was weaker than economists' forecast of 5.1 percent expansion and also down from the 5.3 percent growth posted in the three months to March.

On a quarterly basis, GDP rose 0.7 percent, missing forecasts for 1.1 percent growth. Growth softened markedly from 1.6 percent in the first quarter.

Despite the slowdown, economists at Capital Economics said economic growth will regain some momentum in the coming months.

Property support measures, robust exports and increasing fiscal spending over the coming months should lead to a near-term re-acceleration in growth, they said.

However, growth is unlikely to be sustained over the medium-term, economists noted.

ING economist said Lynn Song said the road to 5 percent growth remains difficult and more fiscal and monetary policy support will be needed in the second half of the year if this year's key growth target is to be achieved.

Data today showed that industrial production climbed 5.3 percent annually in June, beating forecasts for 4.9 percent expansion. Nonetheless, this was down from 5.6 percent in May.

Retail sales logged an annual growth of 2.0 percent in June, while growth was expected to ease to 3.3 percent from 3.7 percent in the previous month.

In January to June period, fixed asset investment advanced 3.9 percent on year, in line with expectations, and eased marginally from 4.0 percent gain in the five months to May.

Property investment slumped 10.1 percent in the first half of the year, the same pace of fall as seen in the January to May period.

The urban jobless rate came in at 5.0 percent, unchanged from May and also matched expectations. Elsewhere, the People's Bank of China added liquidity into the banking system via medium-term lending facility and reverse repos on Monday.

The central bank conducted a CNY 100 billion one-year MLF, at an interest rate of 2.50 percent, which was unchanged from the previous operation.

The bank also injected CNY 129 billion through seven-day reverse repo operations.