Gov't support policies set to kick in soon
China's GDP growth in the second quarter could have slowed further, mainly due to sluggish production and demand, some experts predicted on Monday, ahead of the official GDP announcement on July 15.
Sheng Laiyun, a spokesman for the National Bureau of Statistics (NBS), said Monday that the country's economy is now showing signs of improvement, boosted by the recent pro-growth policies, and the upward trend may continue in the future, according to a post on the NBS website.
But he also noted that the economy is only showing initial signs of improvement and "arduous efforts" will be needed to meet the growth target of around 7 percent for this year.
A number of experts and institutions have forecast that domestic GDP growth in the second quarter will come in below 7 percent.
"We expect June's economic data to again show tepid growth in real activity, and domestic GDP growth in the second quarter may edge down to 6.9 percent," said UBS China in a report sent to the Global Times on Monday.
Xu Gao, chief economist at China Everbright Securities, also said China's GDP growth in the second quarter would slow to 6.9 percent, in a note Xu sent to the Global Times on Sunday.
"The downward pressure on the domestic economy will continue," Xu said in the note.
Chen Weidong, executive deputy director of the Institute of International Finance at the Bank of China, and Niu Bokun, a researcher at Hua Chuang Securities, predicted second-quarter GDP growth of 6.8 percent and 6.9 percent, respectively, according to a report by the Economic Information Daily on Monday.
China's GDP growth slipped to a six-year low of 7 percent in the first three months of 2015.
Experts and institutions have noted that China's real economy remained sluggish in the second quarter, which was reflected in lackluster production and demand indicators.
Data released by NBS on Wednesday showed that China's Purchasing Managers' Index (PMI), an indicator of activity in the manufacturing sector, was 50.2 percent for June, the same as May.
The NBS report noted that manufacturing growth in the second quarter was mainly backed by large enterprises. Industrial production by small and medium-size enterprises softened during the period, with their PMI data dropping 0.4 percentage points and 0.2 percentage points, respectively, compared to May.
The NBS report also noted that June still saw weak demand both in the domestic and international markets, causing difficulties for many enterprises, which are also burdened by capital shortages.
China's Consumer Price Index (CPI) also slipped back 0.2 percentage points on a monthly basis to 1.2 percent in May, according to data from the NBS on June 9.
However, Ye Hang, a professor at Zhejiang University College of Economics, told the Global Times on Monday that China's GDP growth in the second quarter might still be at 7 percent, or could rise slightly to 7.1 percent.
"Although the real economy has faced downward pressure in the first half of 2015, the rapid growth of the Internet industry is lending great support to the domestic economy," said Ye.
China Merchants Securities (CMS) also predicted that China's second-quarter GDP growth would reach 7 percent, due to active monetary policies launched by the central government in June, said a report CMS sent to the Global Times on Monday.
The central government has increased its policy support measures in recent months in a bid to buttress domestic demand and boost economic growth. The People's Bank of China, the central bank, announced on June 27 a cut in benchmark interest rates and banks' reserve requirement ratio.
The government has also taken measures to boost wider use of the Public-Private Partnership (PPP) model. The National Development and Reform Commission and the China Development Bank launched a series of measures in a joint announcement on March 10 to boost PPP programs, such as establishing a mechanism for safeguarding PPP funds.
Ye noted that it will take time for the effects of these government policies to manifest themselves.
Their influence will become clearer "at best around early October," Ye said.
He also noted that economic programs such as the "One Belt, One Road" initiative will help the country to achieve its annual GDP growth target of around 7 percent.
