China's Q2 growth slows, likely to spur reform effort

Mon Jul 15, 2013 4:36am EDT
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By Aileen Wang and Kevin Yao

BEIJING (Reuters) - China's annual GDP growth slowed to 7.5 percent in April to June - the ninth quarter in the last 10 that expansion has weakened - putting pressure on Beijing to quicken reforms rather than slow them to take up the economic slack.

Data showed the world's second-biggest economy slowed down in line with the median forecast in a Reuters poll after growth of 7.7 percent in the January-to-March period. Asian stocks rose on relief growth was not lower after a surprise fall in exports in June.

A spokesman for the National Bureau of Statistics (NBS) said the economy could still meet the full-year growth target of 7.5 percent, while the central bank governor said the government would increase incentives to support small businesses to try to stabilize growth.

But analysts said the slowdown would encourage the government to push harder on reforms. The alternative - pumping more cash into the economy through monetary easing - raises the risk of exacerbating already hot housing and credit markets.

"The slowdown will force the government to push reforms to help unleash new growth engines," said Xiang Songzuo, chief economist at Agricultural Bank of China in Beijing.

The latest year-on-year growth rate was the second-lowest since the global financial crisis after 7.4 percent in the third quarter of last year.


VIDEO: BREAKINGVIEWS Slower, steadier China   Continued...

A migrant worker holding a ticket in his mouth carries his luggage at Beijing railway station June 7, 2013. REUTERS/Kim Kyung-Hoon