China second-quarter economic growth seen slowing as trade war looms

BEIJING (Reuters) – China's second-quarter economic growth is expected to have slowed down slightly from the previous quarter, to Reuters poll showed, as the government's efforts to tackle debt risks and a looming U.S. trade war threatens exports.

The economy has already felt the pinch of a multi-year crediting on riskier lending that has driven up corporate borrowing costs.

Recent developments have been slowed down and slowed down. This comes as a deepening trade war with the United States looks set to hit China's export machine.

A product of the economy of the economy.

product 6.7 percent in the second

quarter of a year earlier, compared with the 6.8 percent

in the previous three quarters.

"The synchronized slowdown in domestic and external demand is likely to grow in the second half," said Lian Ping, chief economist at Bank of Communications.

Lian said he expected growth in the fourth quarter, bringing full-year growth to 6.7 percent – above the government's target of around 6.5 percent.

China's Commerce Ministry on Thursday warned the proposed US tariffs would hit international supply chains, including foreign companies in the world's second-largest economy.

POLICY SUPPORT EXPECTED

Faced with a slowdown in domestic demand and the potential of the trade war, Chinese policymakers are likely to step up policy support for the economy and soften their stance on deleveraging.

The People's Bank of China, which has cut banks, has recently been replaced by "deleveraging" with "structural deleveraging," a change that suggests less harsh curbs on debt.

The central bank also said it will keep liquidity "reasonably ample", a shift from the previous wording of "reasonably stable".

Chinese currency and equity markets have been volatile ahead of July 6, when US tariffs on $ 34 billion worth of Chinese goods are set to kick in, with the yuan losing about 3.3 percent in June against the dollar – its worst month on record .

Beijing has said it would be expensive with tariffs on U.S. products.

"On monetary policy, we expect the PBoC to be more flexible in the future." Nomura economists said they expected the PBoC to deliver at least one more RRR cut before year-end, likely by 100 basis points and increase direct funding to the real economy through other liquidity injection tools, such as the supplementary lending facility.

Despite the economic uncertainty, China is comfortable with a weakening yuan, policy insiders told Reuters, and will intervene only to prevent any further delays and destabilizing declines or to restore market confidence, as the economy loses momentum and faces further trade risks.

China releases second quarter GDP on July 16, along with June industrial output, retail sales, property sales and investment, and fixed asset investment data.

Economists in the sample GDP grew 1.6 percent quarter-on-quarter, versus 1.4 percent in the first quarter.