Another slowdown in China’s economic growth will put further pressure on Beijing to speed up reforms.
The National Statistics Bureau said the slowdown was partly the result of the government’s efforts to reform the economy; it is trying to reduce the country’s reliance on exports and investment and encourage more domestic consumption.
In nine of the last 10 quarters China’s GDP has weakened.
From April to June the world’s second-largest economy expanded by 7.5 percent from the same period last year. In the previous quarter it was 7.7 percent.
Economist Zuo Xiaolei, who heads China Galaxy Securities, said it reflected China’s current stage of economic development: “China’s rapid growth over the last 30 years was based on a major factor, advantageous labour force conditions, but this has now changed. So it is normal that our potential growth has changed accordingly. I think China has entered a new economic phase, and the speed of growth of our economy will also change accordingly.”
Growth also has been dented by a crackdown on bank lending aimed at avoiding bubbles in areas like property
Chinese leaders have promised reforms to make the economy more productive and help entrepreneurs, but no major changes are expected until after a Communist Party meeting in the autumn.
The National Bureau of Statistics said the economy could still meet the full-year growth target of 7.5 percent, which is much stronger than forecasts for Europe, the United States and Japan.
It called the country’s economic performance in the first half of the year “generally stable” and within expectations, but added: “We are still faced with grim and complicated economic situations.”
The concern for the Chinese government is a rise in unemployment, which could spark social unrest.
Zuo Xiaolei of China Galaxy Securities commented: “A growth rate which has been fluctuating around 7.5 percent has not caused huge rates of unemployment. So we believe that a margin of fluctuation centered around 7.5 percent is part of our potential growth level. So we should not worry because of minor fluctuations.
As the latest GDP figures were released, China’s central bank governor said the government would increase incentives to support small businesses to try to stabilise growth.
With Reuters and AP