China's growth slipped to a new seven-year low of 6.6 per cent in the second quarter, according to a new survey, despite government efforts to spur activity in the world's second-largest economy. The forecast for expansion in gross domestic product (GDP), based on a poll of 17 economists,
represents an easing from 6.7 per cent in the first three months of the year.
As the world's biggest trader in goods China is crucial to the global economy and its performance affects partners from Australia to Zambia. Investors worldwide have been worried by its slowing growth.
"Momentum remains downward, so if the government would like to maintain a 6.5 per cent minimum growth rate in the next several years, more aggressive stimulus will be needed," Brian Jackson, Beijing-based economist at IHS Economics, told AFP.
The slowdown comes as policymakers seek to retool the economy, embracing weaker growth as a trade-off for structural reforms to wean the country off cheap exports and massive government spending in favour of domestic consumption.
GDP expanded 6.9 per cent in 2015 - its weakest in a quarter of a century - and the government has targeted growth in a range of 6.5-7.0 per cent for this year. The AFP poll forecasts China will just meet the goal, predicting 6.6 per cent.
Official Chinese figures are viewed with widespread scepticism, and just days ago the government altered its growth calculation method for the second time in less than a year. "China's quarterly GDP releases are being greeted with increasing scepticism and for good reason," Capital Economics said in a recent research report. "The speed of growth that it points to is increasingly hard to believe given the clear structural drags that the economy is facing." Still, most wave off fears of a "hard landing" for China.
"We expect data for the second quarter of 2016 to further reinforce our view that China has not collapsed," PNC Financial Services Group senior international economist Bill Adams said in a research note, though he added the country still faces "daunting challenges". Lower commodity prices, a decline in private spending and weak exports all dragged on the economy in the April-June period.
Adding to the uncertainty, recent flooding in China could cut into industrial production although at the same time give the government the opportunity to build infrastructure for water control, which could be positive for longer-term growth.