China’s economy slowed sharply in the second quarter, pressuring leaders to act more aggressively to boost growth as they gather in Beijing. Gross domestic product expanded 4.7% compared to a year earlier, down from 5.3% in the first quarter and below the 5.0% expected by economists.
Quarter-to-quarter growth fell to 0.7% from 1.5%. The world's second-largest economy is losing momentum due to a property slump, weak consumer spending, and rising trade tensions.
Manufacturing investment and exports drove growth in the second quarter, offsetting weaker consumer spending and property sector strains. Industrial production in the first six months rose 6%, while retail sales grew just 4%, and real-estate investment dropped 10%. New home sales fell 27%.
Chinese leaders have implemented small measures to stimulate growth, such as cutting interest rates and offering cheap loans. However, major stimulus efforts are limited due to concerns about reinflating the property bubble and a weak yuan.
Premier Li Qiang stated the government plans to gradually nurture the economy rather than using strong measures, WSJ notes. The ongoing meeting in Beijing, known as the Third Plenum, could lead to tax system reforms to support consumption and local government finances. Further short-term aid might be signaled by the Politburo meeting later this month to help achieve the 5% growth goal for the year.
