| BEIJING, July 15
BEIJING, July 15 China's GDP growth is expected
to have slowed down in the second quarter as weak overseas
demand weighs on output and investment, providing a test for
Beijing's resolve to revamp the world's second-biggest economy
in the face of deteriorating data.
Second-quarter GDP figures are due to be published on Monday
along with other indicators, including industrial output and
retail sales for June.
A Reuters poll of forecasts by economists projected China's
economy grew 7.5 percent in the April-June quarter from a year
earlier, slowing from 7.7 percent in January-March.
However, trade figures last week showing an unexpected fall
in exports for the first time in 17 months raised market
concerns GDP could be weaker than expected.
New Premier Li Keqiang has been prominent in pushing for
economic reform over fast-line growth, suggesting the government
is in no rush to offer fresh stimulus to revive an economy in a
protracted slowdown. Before Monday's figures, growth had already
slowed in eight of the last nine quarters.
"I'm sticking to our forecast of 7.5 percent Q2 growth, but
there is rising downside risk," said Zhiwei Zhang, chief China
economist with Nomura in Hong Kong.
The government's official growth target for 2013 is 7.5
percent, impressive by world standards but it would be the
slowest pace in 23 years for China.
Analysts have cut their forecasts for 2013 full-year growth
in recent weeks following a run of weak data and government
comments on slowing growth. But they mostly remain between 7 and
Last week, customs data showed China's exports fell 3.1
percent in June against forecasts for a rise of 4 percent, while
imports dipped 0.7 percent versus an expected 8.0 percent rise.
The customs administration added that the outlook for July to
September was "grim."
Other figures had shown factory-gate deflation persisted for
a 16th straight month, backing the view that the economy,
plagued by industrial overcapacity, is losing momentum.
Annual consumer inflation accelerated more than expected in
June, but remained subdued at 2.7 percent, below Beijing's
annual target of 3.5 percent.
The main worry for China's leaders is if the economic
slowdown leads to high unemployment that could spark social
unrest. So far government officials say employment is stable.
So for now economists do not see any major stimulus or
policy shift and instead expect the government to tough out the
slowdown as they pursue a longer-term vision of reforming the
economy towards consumer-led, rather than export- and
Beijing is still cleaning up trillions of dollars in local
government debt left over from its last spending spree during
the 2008/2009 global financial crisis, while trying to rein in
"The focus is still on reforms. The chances of a cut in
interest rates or banks' reserve ratio look slim," said Xu
Hongcai, senior economist at the China Centre for International
Economic Exchanges (CCIEE), a think-tank in Beijing.
"Previously, when the economy was not good, local officials
held out their hands for money from the central government. But
now they have to embrace reforms as no money will be given."