China Real Time ReportToday, 1:37 PM
China’s economic growth held steady at 7% in the second quarter of the year, according to data released Wednesday. The number surprised many analysts who had forecast a growth rate of 6.8%, amid a broad array of indicators pointing to increasing sluggishness in the world’s second-largest economy.
At a news conference Wednesday morning, Sheng Laiyun, spokesman for China’s National Bureau of Statistics, acknowledged that China’s economy is still under downward pressure but maintained that “there is no such kind of situation that we overestimated the gross domestic product.”
“China is in the critical period of restructuring its economy,” Mr. Sheng said. “There is more pressure to shift gears faster.”
Below, economists weigh in on the new GDP data. Their comments are edited for clarity and style.
“China’s second-quarter economic growth was driven mainly by the services sector, particularly from the boom in equities and banking, which is limited in scope and doesn’t reflect an overall improvement.” — Ma Xiaoping, HSBC
“Looking ahead, the support to growth from the financial sector should soon fade. But the recent step-up in policy support will limit the downside risks. … As long as spending on brokerage services didn’t come at the expense of growth elsewhere, headline GDP growth will have been stronger as a result.” —Julian Evans-Pritchard, Capital Economics
“Today’s data showing real GDP rose 7% year-on-year were in line with Fitch’s expectation and track the agency’s projection of 6.8% growth for the year. The agency expects a further sequential pick-up in the second half of the year following recent monetary and credit policy easing. The resilience of retail sales in June is a further encouraging sign that downside risk, while not negligible, is receding, despite recent equity-market volatility. Nonetheless, the longer-term outlook remains one of structural slowdown as the economy works through a painful process of adjustment and deleveraging.” —Andrew Colquhoun, Fitch Ratings
“Activity data continued to disappoint in the second quarter, largely owing to sluggish investment and softening domestic demand. … As deflation risk remains elevated and market sentiment deteriorated sharply amid the stock market slump, China’s monetary policy will have to become accommodative in the remainder of year.” – Liu Ligang and Louis Lam, ANZ
“The government will have much less need to ease monetary policy now, although the financial services boost is only temporary and they’ll need to find other ways to sustain growth. We didn’t expect such a quick response to what the government orchestrated. Perhaps they were more successful than we believed.” – Dariusz Kowalczyk, Credit Agricole
Ding Shuang of Standard Chartered noted that China’s stock market boom in the second-quarter helped the economy grow a faster-than-expected 7% over the same period. Trading volumes of the markets more than quadrupled in the second quarter from the previous quarter, Mr. Ding said. Still, the recent market rout, plus the sluggish manufacturing sector and tapering property investment growth cast some uncertainties over the world’s second-largest economy. Looking forward, China’s monetary policies will likely stay biased towards loosening for the rest of the year, with another two cuts in the amount of deposits banks are required to hold on reserve on the cards, he said.
–Compiled by Rose Yu
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http://www.wsj.com/articles/BL-CJB-27286
July 15, 2015
Economists React: China Maintains 7% GDP Growth in Second Quarter
