China’s Q2 GDP growth seen easing to around 6.7 percent

SHANGHAI: China´s economy will likely expand around 6.7 percent in the second quarter this year, the State Information Center (SIC) said in an article in the state-owned China Securities Journal on Saturday.

The forecast was slightly slower than the 6.8 percent expansion posted in the first quarter.

The SIC is an official think tank affiliated with the National Development and Reform Commission, the country´s top economic planning agency.

April activity data released earlier this week suggested that the world´s second-largest economy is starting to lose some momentum, as analysts have long predicted, as the government continues a crackdown on riskier types of financing.

While still expanding at a good clip, retail sales and fixed asset investment grew more modestly than expected while property sales fell for the first time in six months in the face of continued government curbs on speculation and rising mortgage rates.

The lone bright spot was a rebound in industrial output, though the outlook for exporters is being clouded by trade frictions with the United States.

Despite stronger-than-expected first-quarter growth, economists polled by Reuters still expect a gradual slowdown to around 6.5 percent this year, which is also the government´s target, assuming there are no trade shocks.

The official think tank expects dollar-denominated exports to grow around 8 percent in the second quarter versus a year earlier and imports to rise about 10 percent.

It forecast consumer inflation of around 2 percent and expected producer price inflation would pick-up to

about 3.8 percent in the second quarter from a year earlier.

The think tank suggested the government "maintain flexibility in macro economic policy and actively deal with trade frictions between the United States and China to ensure a steady and healthy development of the country´s broader economy.

"In the same article, the SIC said it expects China´s industrial output to grow about 6.6 percent in April-June from a year earlier, with fixed-asset investment growth of around 7.2 percent and retail sales seen rising about 10 percent.

China´s statistics bureau said this week that steady economic growth in April made a good foundation for achieving the full-year growth target.

Meanwhile, China´s push to open up its financial sector to foreign banks and financial institutions will be based on the principle of reciprocity and will not reward protectionism by other countries, an official said on Saturday.

Chen Wenhui, the vice-chairman of the China Banking and Insurance Regulatory Commission (CBIRC), told a forum that China aimed to accelerate the process of opening up, but countries afraid of exposing their own financial sectors to competition would not benefit.

Without naming any names, Chen said some countries have imposed restrictions on the overseas expansion of Chinese financial institutions.

"Our country´s opening must be based on the principle of equality and mutual benefit," he said. "It will not be carried out on a ´one-size-fits-all´ basis, and should stress mutual benefit and reciprocity.

""For countries and regions that are afraid of opening and implement protectionism, their long term competitiveness will definitely suffer as they only look at short-term gains," he added.

Central bank governor Yi Gang said last month that China would allow domestic and foreign firms to compete on an equal footing and would expand the business scope for foreign banks in China.

China has been put under heightened pressure by the United States over access to its markets, and has promised to allow foreign investors to enter into trust, financial leasing as well as auto and consumer finance by the end of this year.

Chen said the market share of foreign banks made up just 1.32 percent of total banking assets in China by the end of 2017, down from a high of 2.5 percent previously. "The market share has been falling recently, which is not a good thing," he said.