Instant View: China's second-quarter GDP grows 6.2% year-on-year, the slowest in at least 27 years

BEIJING (Reuters) – China's economic growth in the second quarter slowed at its weakest pace in at least 27 years, in line with expectations as domestic and foreign demand slowed against a deadly trade war against the United States .

The economy grew 6.2% in the second quarter compared with the previous year, down from 6.4% in the first quarter, the National Bureau of Statistics said Monday.

Analysts polled by Reuters expected a 6.2% growth in the economy, which would be the slowest pace since the first quarter of 1992, the first quarterly data ever recorded.

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KEY POINTS

** Q2 GDP + 6.2% yoy (fccd + 6.2%, prev + 6.4%)

** Second quarter GDP + 1.6% q / q (circulation + 1.5%, previous + 1.4%)

** Industrial production in June + 6.3% y / y (broadcast + 5.2%, previous + 5.0%)

** Retail sales in June + 9.8% y / y (release 8.3%, prev + 8.6%)

** Investment in fixed badets from January to June + 5.8% y / y (unencrypted + 5.5%, January to May + 5.6%)

** Real estate investment in China January-June + 10.9% y / y

BEN JARMAN, ECONOMIST, JPMORGAN CHASE, SYDNEY

"These are usually higher numbers than we thought. We are seeing a big surprise on the rise. "

"Politics in China is currently subject to constraints because it tries to achieve several goals. They want to support growth through infrastructure and consumer spending, but they are also careful not to reignite a housing bubble. So, to that extent, it means that pressure is broken in the short term to do more for politics. "

CONTEXT:

– The Chinese economy has slowed since last year when the trade war with the United States has weighed on the activity of factories, exports and domestic demand, suggesting that a series Stimulus measures – including tax cuts and easier loan rules – have not yet significant effect on overall growth.

– Washington raised customs tariffs on Chinese goods by $ 200 billion in May, adding to the strain on a struggling manufacturing sector, threatening to squeeze ever-weaker profit margins.

– Although both parties have decided to resume negotiations at the end of June and Washington has announced its intention to avoid additional levies, existing tariffs remain in effect.

– No timetable has been set for the new round of trade talks and Beijing and Washington disagree on important issues.

– The government has focused more on fiscal stimulus to support growth this year, announcing mbadive tax cuts of nearly 2 trillion yuan ($ 291 billion) and a quota 2,150 billion yuan for special bonds issued by local governments.

– The People's Bank of China (PBOC) has reduced the reserve requirement ratio (RRR) of banks six times since the beginning of 2018 to reverse the downward trend in credit growth. He also injected large amounts of cash into the financial system and guided short-term interest rates downward.

– But the economy has been slow to respond and investors fear a longer and more costly trade war between the two largest economies in the world that could trigger a global recession.

– Markets are anxious to know if the PBOC will follow the steps taken by the US Federal Reserve, which is expected to drastically cut rates at its meeting at the end of the month.

– According to a Reuters poll, China's economic growth is expected to reach 6.2 percent this year, its lowest level in 29 years. The economy grew by 6.6% last year.