China’s GDP growth seen slowing to 6.2%

China’s economy grew at its slowest rate in nearly three decades in the second quarter, according to an AFP survey of analysts, hit by the US-China trade war and weakening global demand. The world’s second largest economy expanded 6.2 per cent in April-June, the poll of 10 economists predicted ahead of the official release of gross domestic product figures Monday. The reading would mark the worst quarterly growth in almost three decades but stay within the government’s target range of 6.0-6.5 per cent for the whole year.

The economy grew 6.6pc in 2018. Beijing has stepped up support for the economy this year but the moves have not been enough to offset a domestic slowdown and softening overseas demand for its toys, gadgets and electronics. Policymakers are likely to take further action, analysts say, with Premier Li Keqiang presiding over a state council meeting Wednesday that pledged to lower tariffs and step up tax rebates for exporters.

“The existing tariffs on exports to the US are having an impact on China’s economy,” said Steven Cochrane, chief APAC economist with Moody’s Analytics. “Industrial production and exports are also weak, with shipments to the US declining significantly,” he said. Beijing pushed forward a raft of stimulus measures earlier this year to cushion the impact from its cooling economy, increasing spending on roads, railways and other big-ticket infrastructure projects, and tax cuts worth 2 trillion yuan ($297 billion) kicking in from April.

The policies buoyed the economy in March and brought in 6.4pc growth for the first quarter, but it proved no more than a short-term panacea. Industrial output surged 8.5pc in March before tumbling in April and dropping to five percent growth in May, the slowest increase since 2002. The build in infrastructure investment has also retreated from the first quarter, coming in at 4.0pc in January-May, sharply down from years of near 20pc expansion. China’s 1.3 billion consumers have remained a bright spot.

“Consumption is holding up relatively well, possibly reflecting the effects of income and value-added tax cuts,” said Tommy Wu of Oxford Economics. Sales of big-ticket items such as cars have not held up, though, with sales down 12.4pc in the first half of the year, according to the China Association of Automobile Manufacturers. Analysts widely expect Beijing will step up with further easing in coming months, with Cochrane tipping new measures heading into 2020.