China Economy Cools in Second Quarter


China's economy cooled in the second quarter, a slowdown that is likely to extend over the rest of the year as Beijing steers monetary and fiscal policy back to normal after a record credit surge to counter the global crisis.

Annual gross domestic product growth moderated to 10.3 percent from 11.9 percent in the first quarter, the National Bureau of Statistics (NBS) said on Thursday.

Other data suggested that curbs on lending to home buyers and local authorities, along with an ebbing of government stimulus spending and an end to inventory rebuilding, were biting with greater force as the quarter drew to a close.

Particularly striking was a sharper-than-expected drop in factory growth to 13.7 percent in the year to June.

The government showed no sign of being perturbed, partly because the slowdown reflected a high base of comparison in 2009.

Consumption was resilient, although annual retail sales growth eased to 18.3 percent in June from 18.7 percent in May.

Year-to-date investment in urban areas in fixed assets such as flats and factories slowed a notch, growing 25.5 percent from a year earlier after a 25.9 percent rise in May.

Year-on-year expansion in the stock of outstanding yuan loans slowed to 18.2 percent at the end of June from 33.8 percent as recently as November. Growth in the M2 measure of money supply moderated to 18.5 percent from 29.7 percent over the same period.


TradingEconomics.com, Reuters
7/15/2010 9:58:48 AM