Econintersect: China has announced that GDP grew by 7.5% year-over-year in the 
second quarter, in line with expectations according to Bloomberg. Some analysts had speculated that growth might have been weaker, as much as breaking below 7%. Those speculations were off the mark. However GDP growth was the second weakest since the end of the Great Recession. The weakest reading was only slightly lower at 7.4% for the third quarter of last year. The current 7.5% was less than the average for the four preceeding quarters (7.65%).
The only other readings as low as or less than the current one over the last eleven years were 6.8% and 6.2% (1Q and 2Q 2009) in the depths of the Great Recession. The following two graphs from Trading Economics provide historical perspective. Note: the 2Q 2013 data has not yet been added to these graphs.
Some quotes from other sources-
Bloomberg
Wu Kan, a Shanghai-based fund managerat Dazhong Insurance Co., which oversees $285, said:
“The QFII news is a piece of good news and it shows the regulator wants more capital inflows to support the market. The GDP figure was no surprise. The market is concerned that the government will now sacrifice short-term growth to alter the structure of the economy. However, that’s the price China needs to pay for long-term sustainable growth.”
Nick Maroutsos, managing director and co-founder of Kapstream Capital, which oversees more than $4.5 billion, said in an interview in Sydney:
“They are going to engineer a soft landing in China. We’re advising investors to stay relatively nimble. We’re still very positive on the Asian region.”
The New York Times
Sheng Laiyun, the spokesman for China’s National Bureau of Statistics, told reporters in Beijing:
“Viewed overall, national economic performance in the first half of the year was generally stable and the main indicators remain within the reasonable bounds for the annual forecast. But economic conditions are still complex and changeable.”
Paul Gruenwald, chief economist for Asia-Pacific at Standard & Poor’s, at a media briefing last week:
“The fact that we have not seen moves toward more stimulus seems to show that they are comfortable with seven-ish growth rather than nine or 10. It suggests that the authorities understand that there is a trade-off between growth and financial stability.”
Reuters
Zhou Hao, an economist at ANZ Bank in Shanghai, said:
“These figures are not surprising, adding to signs of downward pressure on China’s economy. The focus is still on reforms. The chances of a cut in interest rates or banks’ reserve ratio look slim.”
Xu Hongcai, senior economist at the China Centre for International Economic Exchanges (CCIEE), a think-tank in Beijing, said before the release of the GDP data:
“The focus is still on reforms. The chances of a cut in interest rates or banks’ reserve ratio look slim.
Previously, when the economy was not good, local officials held out their hands for money from the central government. But now they have to embrace reforms as no money will be given.”
Forbes
Charles G. Chang is skeptical about the numbers:
What is the real growth figure? Among other factors, the severe contraction of aggregate financing in June, the marked fall in exports in May and June, and the evident shrinkage of the manufacturing sector throughout the quarter all point to an economy growing in the low single digits.
Bloomberg reported that Asian and Australian stocks, along with gold rallied on the news.
Sources:
- Asia Stocks, Aussie Gain After China GDP as Gold Rallies (Pratish Narayanan and Adam Haig, Bloomberg, 14 June 2013)
- China’s G.D.P. Growth Slows As Government Changes Gears (Bettina Wassener and Chris Buckley, The New York Times, 14 July 2013)
- China’s GDP growth slows to 7.5 percent, tests reform push (Langi Chiang and Jonathan Standing, Reuters, 14 July 2013)
- Biggest Fib Of The Year: China GDP Grows 7.5% In Q2 (Gordon G. Chang, Forbes, 14 July 2013)
