China economy slows down further; Q2 GDP growth at 7.5%
Pearl Bantillo
15-Jul-2013
(adds details on
crude, petrochemical prices, comments)
SINGAPORE (ICIS)–China’s economic expansion decelerated
further in the second quarter, logging in an annual growth of
7.5% – the lowest in four years, official data showed
on Monday.
In the previous quarter, the economy posted an annual growth
of 7.7%, bringing the average expansion in the first six
months of 2013 to 7.6%, according to data from the National
Bureau of Statistic (NBS).
Fixed assets investments in January to June 2013 increased by
20.1% year on year, down by 0.3 percentage points from the
same period last year, the data showed.
For the month of June, China’s industries recorded an 8.9%
year-on-year growth, representing a 0.3 percentage-point
decline from May, according to the data.
The Chinese government intends to keep implementing a
proactive fiscal policy and prudent monetary policy to ensure
economic stability, NBS said.
China is targeting a full-year GDP growth target of 7.5%,
lower than last year’s 7.8% expansion, which is a 13-year
low.
The second-quarter growth, however, was in line with
expectations, according to Singapore-based DBS Bank Research
in a note to clients.
“We reckon anything above 7.0% is deemed acceptable to the
government, as China needs only 7.0% growth on average to
double GDP per capita by 2020. No stimulus is expected unless
growth dips below that,” it said.
China is not expected to tighten monetary policy is
unlikely as its consumer price index (CPI) has stayed
consistently low at 2.4% for both the first and second
quarters, DBS Bank Research said.
The country is Asia’s biggest petrochemical importer that its
economic weakness is expected to have regional
repercussions.
“What happens in China will affect the rest of Asia,
including India,” said a Mumbai-based polyolefins
trader.
“When Chinese market is weak, everyone will stop buying PE
[polyethylene] and PP [polypropylene]. Everyone will be very
bearish, and prices will fall,” the trader said.
Concerns about oil demand weakening from the world’s second
biggest economy and its top energy consumer were supporting
crude oil prices on Monday.
At midday, US crude were trading at $105.97/bbl, with Brent
crude at $108.90/bbl. Naphtha prices were $8-9/tonne higher
at $919.50-922.50/tonne.
In the toluene market, players have taken to the sidelines
following the release of China’s GDP growth slowing down in
the second quarter.
Ethylene prices remained at $1,260-1,300/tonne CFR (cost and
freight) NE (northeast) Asia, while propylene prices were
unchanged at $1,390-1,410/tonne CFR NE Asia.
Additional reporting by Viola Pan and Muhamad
Fadhil
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