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Economic growth eases to 7.5%
Aggregated Source: Shanghai Daily: Business

China's economic growth eased further to 7.5 percent in the second quarter from the increase of 7.7 percent in the first three months, reflecting a weakening recovery in the world's second-largest economy.

The country's gross domestic product expanded to 24.8 trillion yuan (US$4 trillion) in the first half, up 7.6 percent from a year earlier, the National Bureau of Statistics said this morning.

Sheng Laiyun, a bureau spokesman, said China's economic performance was relatively stable as the country beefed up efforts at economic restructuring and reform amid many external uncertainties.

"Although China's growth slowed, we should see the improvement in growth quality that benefits our long-term development," Sheng said at a news briefing. "The new leadership pays special attention to economic restructuring and reform, and is more tolerant of slower growth pace."

Sheng said China's agriculture strengthened in the first six months as rice production increased 1.5 percent in the summer, while advanced services and strategic industries continued a strong growth momentum, and the industrial structure was being updated in the direction of manufacturing higher-end, more innovative and more environmentally friendly products.

China's industrial production expanded 9.3 percent year on year during the January-June period, down 0.2 percentage points from that in the first three months, according to the bureau.

Fixed-asset investment added 20.1 percent to 18.1 trillion yuan, compared with the pace of 20.9 percent in the first quarter.

Retail sales rose 12.7 percent, accelerating 0.3 percentage points from that in the first three months.

Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd, said these figures were not surprising, but they added signs of downward pressure on China's economy.

"The slowing growth was mainly dragged by declining industrial production, and worsening export conditions," Zhou said. "We believe China is to grow at around 7.6 percent this year with inflation falling to a range of 2.5 percent to 3 percent this year."

Zhou said some downside risks remained, including growing unemployment pressure, the possibility that high money market rates and deleveraging by commercial banks may spill over to the real sector, and the fragile local government financing platform.

To head off such risks, Zhou said the government will need to take prompt policy actions, such as adjusting the monetary policy stance to reflect the rapidly changing domestic and external conditions.

"An interest rate cut is long overdue, and a reserve requirement ratio cut should not be excluded if capital flight were to occur," Zhou said. "China's fiscal policy remains effective as the country still has plenty of room to invest, such as in urban infrastructure, technology updates, and human capital."

Zhou added that reforms and opening up of the financial sector will also help instill confidence in China's future growth prospects.

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