* Q2 GDP growth seen at 7.4 pct y/y, unchanged from Q1
* Goverment stimulus measures shored up activity
* June activity data may pick up but property weighs
* Data due at 10 a.m. local time/0200 GMT
* More policy help seen needed to keep growth on track
By Kevin Yao
BEIJING, July 16 China's leaders are expecting
to see a dividend from three months of stimulus spending in
second-quarter growth data on Wednesday, but the economy may
need even more state support to meet this year's growth target
of 7.5 percent.
An unexpectedly hefty increase in bank loans in June is
being taken as a signal of Beijing's alarm at the slowdown, and
how far it is prepared to go to ensure growth gets back on
Thanks to a raft of government stimulus measures, China's
economy likely grew 7.4 percent in April-June from the same
period a year earlier, unchanged from the pace in the first
quarter, a Reuters poll showed. The first-quarter reading was
the weakest in 18 months.
But there could be a modest upside surprise, given that
Premier Li Keqiang said last week that growth quickened in the
second quarter from the previous three months.
Still, many economists believe more policy support may be
needed in coming months to sustain any recovery, particularly if
the cooling property market begins to deteriorate more sharply.
"We expect Beijing to continue rolling out small-scale
measures to deliver the annual growth target of around 7.5
percent," Ting Lu and Xiaojia Zhi at Bank of America-Merrill
Lynch in Hong Kong said in a note.
"That said, we believe Beijing will resist calls for
universal and massive easing such as RRR for all banks,"
referring to the amount of reserves which banks are required to
The government has been rolling out a series of targeted
policy measures since April, including steps to reduce the
amount of cash that some banks have to hold as reserves,
instructing regional governments to quicken their spending, and
hastening the construction of railways and public housing.
Premier Li Keqiang vowed recently that the economy would
grow by at least 7.5 percent in 2014, surprising many market
watchers after a weak start to the year and reinforcing
expectations of more government assistance to come.
ACTIVITY IN JUNE PICKS UP
Along with second-quarter gross domestic product, Beijing
will also report the last of its activity indicators for June,
which could give investors more clues on how much economic
momentum will be carried into the second half of the year.
Manufacturing output is forecast to have grown 9 percent in
June, up a shade from May's 8.8 percent. Retail sales, a key
gauge of consumption and a counterweight to sluggish exports,
may have grown 12.4 percent in June, easing slightly from 12.5
percent in May.
Growth in fixed-asset investment, a key growth driver, is
seen hovering at 17.2 percent in the first six months of 2014 -
unchanged from the pace seen in the first five months.
But investors will be bracing for details on real estate
investment. New construction fell by nearly a fifth in the first
five months of the year, while average home prices in May fell
for the first time in two years.
Data on Tuesday showed Chinese banks lent a much
stronger-than expected 1.08 trillion yuan ($173.9 billion) worth
of new yuan loans in June while broad M2 money supply jumped
14.7 percent from a year earlier, as the central bank loosens
monetary conditions to support the economy.
Other data last week showed inflation cooled more than
expected in June, pointing to lingering sluggishness in the
economy, while exports did not improve as much as expected,
putting greater pressure on Beijing to spur domestic demand.
Some analysts expect modest upside surprises in the
investment and industrial production growth for June, with some
expecting second-quarter GDP growth to be around 7.5 percent.
Top leaders have ruled out the possibility of any massive
stimulus as China struggles to deal with piles of local
government debt, the hangover from a 4 trillion yuan ($644
billion) spending package implemented in 2008-09 to help cushion
the country from the global financial crisis.
($1 = 6.2098 yuan)
(Editing by Kim Coghill)