China’s leaders face new pressure to stimulate a slowing economy after growth fell to its lowest since 1991, hurt by weak trade and efforts to cool a credit boom.
The world’s second-largest economy expanded 7.5 percent over a year earlier in the three months ending in June, down from the previous quarter’s 7.7 percent, data showed Monday. Growth in factory production, investment and other indicators weakened.
The fifth straight quarter of growth below 8 percent is “a clear sign of distress,” said IHS Global Insight analyst Xianfang Ren in a report. With investment weak, she said growth might be “at risk of stalling.”
Analysts said growth could fall further in the current quarter, adding to pressure on communist leaders who took power last year and are trying to shift China from reliance on exports and investment to slower, more sustainable growth based on domestic consumption.
Chinese leaders are likely to respond by launching new stimulus to make sure growth hits their target for this year of 7.5 percent, said Credit Agricole CIB economist Dariusz Kowalczyk. He said that might include weakening the Chinese currency to spur exports or pumping money into the economy through higher public works spending.