China growth slows ahead of key economic meeting

China’s economic growth likely weakened in the second quarter, with headwinds adding pressure on Chinese leaders to lift confidence at a twice-a-decade policy meeting next week, according to Bloomberg.

Data due Monday is expected to show the world’s second-largest economy grew 5.0 per cent in the last quarter compared to the same period in 2023, according to economists surveyed by Bloomberg. That’d be the lowest rate in three quarters, even though it should keep expansion for the first six months of the year at 5.2 per cent, above Beijing’s annual goal of around 5 per cent.

Domestic demand was probably sluggish in June, with increases in production and consumption both expected to cool from May and the property sector continuing to contract.

The official economic indicators for June and the second quarter are scheduled to be released on the same day President Xi Jinping and the ruling Communist Party’s senior officials are set to start the much-anticipated third plenum after an unusual delay.

Authorities should make policy to address the property downturn, boost technology self-sufficiency and relieve local fiscal strains during the four-day conclave, economists said in another Bloomberg survey. As far as the critical real estate sector is concerned, most expect the gathering to focus on ramping up a May plan to have local governments buy unsold homes.

The economy could face even more challenges over the rest of the year. Rising trade tensions threaten to overshadow growth in exports. The central bank appears keen to cool a record-breaking bond rally to contain risks of a bubble. Heavy debt burden prevents local governments from making new investment to stimulate growth.

Gross domestic product growth may decelerate “markedly” to 4.2 per cent in the second half of the year “unless Beijing ramps up stimulus by speeding up fund injections significantly for completing unfinished pre-sold homes,”