China’s new tough-love approach to overhauling its giant economy showed through in weak economic data released today, underlining just how rapidly growth in the once-sizzling economy has cooled.
China’s economy grew 7.5 per cent in the second quarter of this year, compared with the same period a year earlier, the national statistics office reported. That was in line with economists’ expectations, and extended a progressive slowdown from 7.7 per cent gross domestic product growth in the first quarter and 7.9 per cent in the final three months of 2012.
Industrial output data for June, also released this morning, came in weaker than forecast, with an increase of 8.9 per cent from a year earlier - down from 9.2 per cent in May.
Retail sales, however, were better than expected, rising 13.3 per cent in June from a year ago. May’s reading was 12.9 per cent.
Sheng Laiyun, the spokesman for China’s National Bureau of Statistics, told reporters in Beijing that the data were within the bounds of official expectations, but he acknowledged headwinds affecting the economy.
“Viewed overall, national economic performance in the first half of the year was generally stable,” Mr Sheng said during a news conference broadcast live on Chinese television Monday morning, “and the main indicators remain within the reasonable bounds for the annual forecast. But economic conditions are still complex and changeable.”
Senior Chinese officials last week set the tone for a more measured approach to economic expansion by declaring confidence in government growth targets, yet stressing the need for changes to ensure that growth.
On Friday, a meeting of the State Council Standing Committee - or China’s Cabinet - that was chaired by prime minister Li Keqiang said that “innovation and expansive thinking are needed to expand domestic demand.”
“There needs to be both effective and stable growth and also structural adjustment, ensuring that there is action while maintaining stability,” read an official summary of the meeting, according to state-run media.
In an apparent effort to dispel jitters about the economy, China’s state-run media have also featured commentaries saying that the government’s economic policies remain on track, including the target of 7.5 per cent GDP growth for the whole year.
To a large degree, China’s recent slowdown has been engineered by authorities in Beijing, who are trying to steer the Chinese economy from an increasingly outdated growth model toward expansion that is more productive and sustainable, if slower.
While this slowdown has been happening for more than two years, a flood of comments from policymakers in recent months has made it increasingly clear that the new leadership that took the helm in March is serious about tolerating significantly slower growth in return for longer-term gains.
NYT Service
