China’s second quarter growth slows to 7.5%

China’s economic growth slowed to 7.5 per cent in the second quarter of this year, down from 7.7 per cent in the first quarter, the government said.

The second-quarter slowdown was in line with analysts’ forecasts, with growth expected to fall further in the second half of this year.

The growth figure was influenced by global economic problems and reflected the government’s focus on long-term structural adjustment, said Sheng Laiyun, a spokesman for the National Bureau of Statistics.

He Xiaoyu, an economist at the Central University of Finance and Economics in Beijing, said the ruling Communist Party should still be able to meet its target of 7.5 per cent for annual growth.

“It might be a little bit lower than expectations, but it won’t be too low,” he said of expected annual growth.

“Nowadays, the economy doesn’t need to grow too fast. The focus now is structural reform,” economist Huang Weiping of People’s University in Beijing told dpa.

Domestic and international analysts are debating China’s ability to meet its annual target and the pros of cons of a possible government stimulus package to bolster growth.

Finance Minister Lou Jiwei was quoted last week as saying annual growth could fall as low as 7 per cent, before state media revised their reports to quote him as saying China was likely to meet the 7.5 per cent target.

China’s leaders generally oppose using another stimulus but if growth slips too far, “they might do something to support it,” he said.

The problem of shadow banking and non-performing loans was “very serious” but controllable, he said.

Annual growth of the world’s second-largest economy fell to 7.8 per cent last year, the slowest since 1999, after 9.3 per cent in 2011.

Growth has fallen amid the eurozone debt crisis and uncertainty over the US economic recovery, as well as rising wages and other production costs in China.

The government issued a series of measures in March designed to reduce income inequality and promote consumption, as part of its rebalancing of the world’s second-largest economy away from its reliance on exports and investment in infrastructure.

It aims to raise incomes in urban and rural areas, focussing on helping the poorest people, expanding the emerging middle class and building a stronger social welfare system.

A major thrust is expected to come through acceleration of China’s massive programme to raise its urbanisation rate from the current 53 per cent to about 75 per cent of its 1.3 billion people by 2030.

The urbanisation drive is expected to spur investment demand by at least 40 trillion yuan (6.5 trillion dollars) over the next decade, officials said in November.

The government is expected to issue a new urbanisation policy soon, and the economy is “just maintaining the status quo” while awaiting the policy, Huang said.

“I personally don’t think the growth [target] can be reached by household consumption,” Huang said. “It has to rely on investment, including domestic and overseas investment.”

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