China Q2 GDP growth 7.6%, slowest in 3 years

BEIJING: China's economy grew 7.6% in the second quarter of 2012
from a year earlier, its slowest pace in three years, confirming
expectations of a downward trajectory that leaves full-year growth on
course for its softest showing since 1999.
The GDP number
released on Friday, which was in line with a Reuters poll, marked the
sixth straight quarter of easing growth and left analysts combing a
raft of accompanying data to assess whether the second quarter marks
the bottom - or an extension - of the downward cycle.
The data
is crucial for investors facing a slowdown not only in China, the
world's second-largest economy, but anemic growth across the BRIC
grouping of major emerging economies - Brazil, Russia, India and China
- which combine as the biggest marginal generators of global growth.
"I
think the 7.6% rise in GDP is largely priced in by the market and it
partially alleviates some worries that the economy may plunge below 7
percent," said Jiang Chao, an analyst at Guotai Junan Securities in
Shanghai.
"But the figure is close to the alarming line of 7.5%
set by the government, which means Beijing will intensify its efforts
to further ease its policy to bolster growth."
Other data
released alongside GDP revealed fixed asset investment growth was 20.4%
in the year to June versus the 20.1% forecast in the benchmark Reuters
poll.
Retail sales in June were up 13.7% on a year ago versus
May's 13.8% and industrial output grew 9.5% versus expectations of 9.8
percent.
Asian share prices and emerging Asian currencies firmed modestly after the data.
MARKETS FEAR SHARPER SLOWDOWN
Inflation
and trade data earlier this week showing fast-easing consumer prices,
outright deflation in producer prices and import growth at less than
half the rate expected in June sent a bearish shiver through financial
markets.
Two interest rate cuts in the space of a month,
accompanied by liberalization moves allowing banks to discount
borrowing costs by a further 30%, had already fuelled investors' fears
that China's economy may be slowing more sharply than expected -
jeopardizing even Beijing's official full year GDP growth target of
7.5%.
Companies on at least three continents have blamed slowing Chinese growth for their worsening performance.
This week alone, British fashion brand Burberry reported a decline in its China sales growth, U.S. chipmaker Advanced Micro Devices
warned of disappointing Q2 revenue because of softer than expected
sales in China and Europe and China South Airlines <1055.HK> said
its H1 net profit would likely fall in part on slower domestic growth.
Economists
remain divided about when China's economy will reach the bottom of its
current cycle, with many preparing to take the scalpel to full-year
forecasts which, according to the last Reuters consensus poll in April,
call 2012 growth at 8.4 percent.
The Asian Development Bank
cut its full-year China growth expectations for 2012 to 8.2% in new
forecasts published on Thursday, down from the 8.5% they had estimated
in April. - Reuters