The National Bureau of Statistics (NBS) found China’s growth fell to 7.6 percent, down from 8.1 percent in the first quarter. The world’s second-biggest economy has been plagued with a sluggish property market and enervated exports from Europe, its biggest trade partner, as well as a too-heavy reliance on domestic consumption.
According to the WSJ, consumption contributed to 57.7 percent of GDP growth so far this year, up from 47.5 percent in the first quarter in 2011. Investments were down by 53.2 percent, in comparison to the same period last year, and export growth figures saw a loss of 7.1 percent.
China accounts for roughly one fifth of the world’s total economic output and some analysts are worried this slowdown may impede global growth.
Tai Hui from Standard Chartered Bank in Singapore said China has been a big factor for the slowdown in the Asia-Pacific region.
“If China’s growth does not pick up in the second half of the year then that’s going to mean a very difficult second half for a lot of the manufacturers in this region,” he told the BBC.
However, other analysts have voiced optimism about the figures. NBS spokesman Sheng Laiyun said, generally speaking, China’s economy has run smoothly so far this year.
“We should not be too obsessed with an eight percent economic growth,” he said.
“According to preliminary statistics, the country’s GDP grew to reach 22.71trn Yuan ($3.6trn) during the first half.
“The growth rate of 7.6 percent is already an achievement because the economic situation facing China has been complex and severe. We have seen domestic and external demand.”
Last week, the Chinese central bank cut interest rates for the second time in two months, in order to counteract the effects of the euro debt crisis. The latest lending figures show the government is trying to support economic growth through new loans, which rose steadily in June to 919bn yuan ($144bn), from 793bn yuan in May.
Premier Wen Jiabao has also announced he will look to increase public investment to stabilise the economy, but it is unlikely there will be any strategic plan put in place to echo arrangements like the 4trn yuan bailout made after the 2008 crisis.
“The downside risks remain, but the government has plenty of tools in its hands to make sure it won’t collapse,” said Qian Liu from the Economist Intelligence Unit. “The issue is whether the government can adjust to steady and healthy growth in the medium term.”
