China economy grows slower in Q2 on monetary tightening

GUANGZHOU (ICIS)--China, the world’s second largest economy, expanded at a 9.5% pace in the second quarter, slowing from the 9.7% clip recorded in the previous quarter amid the government’s continuous effort to rein in credit, official data showed on Wednesday.

 “Although growth was decelerating, the economy remained in good [growth] momentum,” said Meng Xiangjuan, chief analyst at Shanghai-based brokerage Shenyin & Wanguo Securities.

In the first half of the year, the country’s GDP growth averaged 9.6%, according to the National Bureau of Statistics (NBS).

Industry production increased by 14.3% over the same period, while fixed assets investment expanded by 25.6%, the data showed.

China’s GDP has posted quarterly growths below 10% since the third quarter of last year, achieved through the government’s active monetary tightening policy to prevent a runaway inflation that could hurt the economy in the long run.

Inflation, which tracks the movement of consumer prices, jumped to a three-year high of 6.4% in June, according to NBS.

The government is expected to maintain its tight monetary and financial policies to contain inflation, which is currently deemed as the biggest threat to China’s economic well-being, analysts said.

“The tight polices is unlikely to be loosened before the fourth quarter,” said Meng.