China growth grinds to three-year low

By Fran Wang ,AFP

BEIJING — China’s economy expanded at its slowest pace in more than three years as dire problems overseas started to hit home, official data showed Friday, fuelling expectations of more stimulus moves. The world’s second-largest economy grew 7.6 percent in the second quarter year-on-year, the National Bureau of Statistics said, the weakest since 6.6 percent during the depths of the global financial crisis at the start of 2009. “(The slowdown) was mainly due to the continued deterioration in the international environment, which further dampened foreign demand,” statistics bureau spokesman Sheng Laiyun told reporters. “Domestic demand eased also as macro-economic tightening, particularly controls on the real estate sector, continued.” The weak second-quarter expansion dragged down growth to 7.8 percent for the first half of the year, a period when the debt crisis in Europe has deepened and the U.S. economy has continued to struggle. Sheng expressed confidence that the economy would stabilize and China would meet its full-year growth target of 7.5 percent. “I believe China’s economy will continue moderate and steady growth in the second half of the year,” he said, citing the potential for investment, consumption and exports to propel expansion the rest of the year. “We are very confident in achieving the full-year growth target.” Nevertheless, the target growth rate of 7.5 percent is well down on the 9.2 percent achieved last year, and 10.4 percent in 2010. Stock market reaction in China to Friday’s data was muted, with the benchmark Shanghai Composite Index ending a mere fraction higher. Some other markets, including in Hong Kong, South Korea and Australia, showed stronger gains amid general relief that China’s growth figure was not worse. Tang Jianwei, economist at Bank of Communications in Shanghai, said the second-quarter result was in line with expectations and that China’s planners would be able to speed up the economy. “We expect economic conditions in the second half of the year will be slightly better than the first half,” Tang told AFP.

“We’ve already seen stabilization in investment from June’s data thanks to government stimulus policies.”