BEIJING: China's economy likely slowed in the second quarter as a protracted property downturn and job insecurity weighed on domestic demand, keeping alive expectations Beijing will need to unleash more stimulus.
Data released on Monday is expected to show the world's second-largest economy grew 5.1 per cent year-on-year in April-June, slowing from 5.3 per cent in the previous three months and the weakest growth since the third quarter of 2023, according to a Reuters poll.
The figures come as Beijing seeks to shore up economic confidence at a highly anticipated third plenum, a key leadership meeting that starts Monday, although conflicting requirements such as boosting growth and cutting debt complicate those plans.
"GDP growth could reach 5.1 per cent year-on-year in the second quarter but it may not provide much confidence. Soft domestic demand could continue to weigh on inflation and start to erode production strength," analysts at Citi said in a note.
"All eyes could be on the third plenum and the Politburo meeting this July."
On a quarterly basis, the economy is forecast to expand 1.1 per cent in the second quarter, slowing from 1.6 per cent in January-March, the poll showed. The government is aiming for economic growth of around 5.0 per cent for 2024, a target that many analysts believe is ambitious and may require more stimulus.
To counter soft domestic demand and a property crisis, China has boosted infrastructure investment and ploughed funds into high-tech manufacturing.
China's economic growth has been uneven this year, with industrial output outstripping domestic consumption, fanning deflationary risks amid the property downturn and mounting local government debt.
While solid Chinese exports have provided some support, rising trade tensions now pose a threat.
China's exports rose 8.6 per cent in June from a year earlier, and imports unexpectedly shrank 2.3 per cent, data released this month showed, suggesting manufacturers are frontloading orders to get ahead of tariffs from trade partners.
Consumer prices meanwhile grew for a fifth month in June but missed expectations, while factory deflation persisted, with government measures unable to meaningfully lift domestic demand.
GDP data is due on Monday at 0200 GMT. Separate data on June activity is expected to show both industrial output and retail sales slowing.
China's central bank governor Pan Gongsheng last month pledged to stick to a supportive monetary policy stance and said the bank will flexibly use policy tools including interest rates and reserve requirement ratios to support economic development.
Analysts polled by Reuters expect a 10-basis points cut in China's one-year loan prime rate as well as a 25-basis points cut in banks' reserve requirement ratio in the third quarter.
Citi analysts expect the government to unleash another round of property-supporting measures after a meeting of the Politburo, a top decision-making of the ruling Communist Party, that is expected in late July.
Authorities in May allowed local state-owned enterprises to buy unsold completed homes, with the central bank setting up a 300 billion yuan relending loan facility for affordable housing.