China's economy expanded at its slowest pace in more than two years during the second quarter, heightening pressure on Beijing to introduce additional policy support. Gross domestic product grew 4.3 percent in the April-to-June period, falling short of expectations and the government's full-year target range.
The reading marked a slowdown from 5 percent growth in the first quarter and came below the 4.5 percent median forecast in a poll of economists. It also undershot Beijing's annual target of 4.5 percent to 5 percent, the most modest goal set in decades. Officials highlighted an acute imbalance between excess supply and weak demand, calling for stronger counter-cyclical measures.
Urban fixed-asset investment dropped 5.7 percent in the first half of the year compared with the same period a year earlier, exceeding the anticipated decline of 4.9 percent. Real estate investment plunged 18 percent, while spending on infrastructure and manufacturing fell 2.4 percent and 1.2 percent respectively. Economists linked the weakness to local governments prioritizing debt restructuring and a lack of viable projects.
Analysts expect authorities to intensify stimulus in the coming months, potentially including interest rate reductions. Beijing's efforts to curb excess capacity and end price competition are also seen as further constraining private investment in the near term.
Some positive signals emerged in monthly data. Retail sales rose 1 percent in June, recovering from a 0.6 percent contraction in May and surpassing forecasts for a 0.1 percent decline. Industrial production increased 5.3 percent, beating expectations of 4.7 percent and accelerating from 4.5 percent the previous month.
A former central bank adviser and Tsinghua University professor urged a significant expansion of government borrowing, calling for new debt issuance to more than double this year's planned 12 trillion yuan.
The reading marked a slowdown from 5 percent growth in the first quarter and came below the 4.5 percent median forecast in a poll of economists. It also undershot Beijing's annual target of 4.5 percent to 5 percent, the most modest goal set in decades. Officials highlighted an acute imbalance between excess supply and weak demand, calling for stronger counter-cyclical measures.
Urban fixed-asset investment dropped 5.7 percent in the first half of the year compared with the same period a year earlier, exceeding the anticipated decline of 4.9 percent. Real estate investment plunged 18 percent, while spending on infrastructure and manufacturing fell 2.4 percent and 1.2 percent respectively. Economists linked the weakness to local governments prioritizing debt restructuring and a lack of viable projects.
Analysts expect authorities to intensify stimulus in the coming months, potentially including interest rate reductions. Beijing's efforts to curb excess capacity and end price competition are also seen as further constraining private investment in the near term.
Some positive signals emerged in monthly data. Retail sales rose 1 percent in June, recovering from a 0.6 percent contraction in May and surpassing forecasts for a 0.1 percent decline. Industrial production increased 5.3 percent, beating expectations of 4.7 percent and accelerating from 4.5 percent the previous month.
A former central bank adviser and Tsinghua University professor urged a significant expansion of government borrowing, calling for new debt issuance to more than double this year's planned 12 trillion yuan.