China's economic growth picks up thanks to government stimulus

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China's economic growth picks up thanks to government stimulus

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Economic growth in China picked up slightly between April and June, growing by 7.5 percent from the same period last year an improvement on the previous quarters 7.4 percent, but analysts said that was more due to government stimulus measures than a natural recovery in momentum.

Those measures include speeding up construction of public housing and railways, local governments easing home buying restrictions, a surprising surge in lending by state-controlled banks in June and a reduction in the cash reserves some banks have to hold.

The statement from China’s National Bureau of Statistics contained this cautious note from spokesman Sheng Laiyun: “We can’t be over-optimistic about our economy. The economic situation remains very complicated, we will still feel the pain of adjusting our traditional industries for a long time and we still face the pressure of economic slowdown.”

The Beijing government is predicting growth for the whole of this year will be 7.5 percent, down from the previous two years’ 7.7 percent.

The feeling among economists is more stimulus will be needed to achieve that.

A cooling property market is seen as the biggest risk to growth in the second half of the year.

Depending on what happens with property prices, Beijing could stick to a steady rollout of modest stimulus or go for more aggressive action such as interest rate cuts.

One thing the government is pleased with is continued growing domestic consumption as it moves to a less export-driven economy.