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China's GDP growth eases in July

2014-08-14 08:25 Shanghai Daily Web Editor: Qin Dexing

China's economic growth eased in July with data for major activities growing at a slower pace, the National Bureau of Statistics said yesterday, reinforcing doubts among analysts over the state of the country's economic recovery.

The official data showed that industrial production grew 9 percent from a year earlier in July, down from the increase of 9.2 percent a month earlier.

Retail sales jumped 12.2 percent last month, also 0.2 percentage points weaker than the pace in June.

Fixed-asset investment added 17 percent in the first seven months of this year, below the growth of 17.3 percent in the first half, according to the statistics bureau.

"The data created negative surprises," said Lian Ping, chief economist at the Bank of Communications.

"They suggested China's growth momentum has decelerated again despite accommodative policies."

Wang Tao, an economist at UBS, also said the data contrasted with the recent signs of further policy easing.

But the weaker performance in real activity was in line with the unexpected decline in credit data. According to the central bank, China's new yuan lending dropped to 385.2 billion yuan (US$62.6 billion) in July from 1.1 trillion yuan a month earlier.

The central bank denied a change in supportive monetary policy stance hours after the release of the data. Instead it blamed seasonal factors and tougher rules over shadow banking as the main reasons for the sharp decline.

Wang with UBS cautioned against overreacting to July's statistics. "We do not see these as evidence of credit tightening and expect the data to improve in the coming months," Wang said.

Li Maoyu, an analyst at Changjiang Securities Co, said the authorities may further relax monetary policies, such as another cut in reserve requirement ratio that allows banks to put aside less money as reserves, to bolster credit supply and support market confidence.

In the first half, China's gross domestic product grew 7.4 percent, rising to 7.5 percent in the second quarter from 7.4 percent in the first three months.

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