China's Economic Growth and Inflation Slow down in Q2 During Restructuring and Recovering

Under a series of new limitations on lending and investment, China's economy has grown by 10.3 percent in the second quarter, slower than the overall 11.1 percent growth in the first half year. But as CRI's Wang Jing tells us, stats officials say the moderate slowdown is still within the target range, and also good for the country's ongoing economic restructuring.

Reporter:

The latest figures from Chinese National Bureau of Statistics show the country's economic growth rate for the first half at 11.1 percent, with an overall gross domestic product of some 17 trillion yuan, or over 2.5 trillion US dollars.

The country's economy grew by 10.3 percent in the April to June quarter, which is still above the government's growth target of 8 percent, but below the 11.9 percent growth during the first quarter.

Sheng Laiyun, a spokesperson for the statistics bureau, says that despite the decline, growth is still "very high" and within the target range.

"The moderate slowdown of China's economic growth is conducive to preventing the economy from overheating, and is good for us to strengthen measures of structural adjustment and growth pattern changes."

The government has taken a number of steps this year to boost domestic consumption and reduce this country's historic reliance on resource-intensive investment and exports to drive growth.

Glen Maguire, chief China economist with Societe Generale, says the slowdown may be partly due to the newly imposed limitations on lending and investment, which are aimed at curbing soaring housing prices and control potential asset bubbles.

"I think it is probably slowing a little bit faster than they had expected to see. Or the broad brush they used to cool the property sector has probably had a little bit more of tangible effect on economic growth that they are expecting."

Under a series of curbing measures, housing prices in China's 70 large-and-medium size cities fell 1 percent in June from the month before, although the growth rate is still at 11.4 percent year-on-year.

NBS spokesperson Sheng Laiyun says in the long term, the macro economy will benefit from the cooling measures.

"In the short term, the new policies still have not had tangible effects on the economy. We can see in the first half, property investment grew by 38.1 percent, which was still much higher than last year. So we don't expect new policies will bring very noticeable effects to the whole economy soon."

Meantime, the NBS is also reporting the consumer price index, or CPI, a major gauge of inflation, increased 2.6 percent for the first half of the year, and the producer price index, which reflects the industrial sectors performance, rose 6 percent year on year.

The International Monetary Fund now believes China's economy will expand by 10.5 percent this year, while central government's target is 8 percent, which is widely thought to be reached easily.

For CRI, I'm Wang Jing.