China second-quarter GDP growth likely to cool

BEIJING – China is expected to report on Monday that its economy grew 6.8 per cent in April-June from a year earlier, cooling from the previous quarter’s robust 6.9 per cent pace as policymakers seek to rein in property and debt risks.

Beijing is trying to defuse property bubbles and curb a debt build-up amid fears such risks could derail the world’s second-largest economy if not handled well, but policymakers look to be treading warily ahead of a key party meeting later this year.

Authorities’ restrictive measures on the property sector have slowed investment, while a regulatory crackdown on unscrupulous lending and a modest shift to tighter monetary conditions have started to drive up funding costs for banks and companies.

Most economists polled by Reuters expected China’s second-quarter gross domestic product growth to slow from a stronger than expected 6.9 per cent rise in the first quarter, which was the fastest expansion in six quarters.

“China GDP surprised on the upside last quarter. The key driving force came from the industrial sectors but the momentum does not seem to be lasting long,” analysts at Natixis said in a research note.

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