China's economy growth cools further amid US tariff war | AP business

China's economy growth cools further amid US tariff war | AP business

A disappointing number would add to worries about slowing global growth and reinforce the case for more stimulus by Chinese authorities as a damaging trade war with the United States rages on.

China's economic growth slowed to 6.2% in the second quarter from a year earlier, the weakest pace in at least 27 years, as demand at home and overseas faltered amid an escalating trade war with the United States.

Analysts said the 6.2% annual rate of growth reported for April-June suggests the trade war between the US and China is hammering industries.

"The gloom hanging over China's economy is unlikely to go away soon due to challenges on both domestic and external fronts", analysts at ANZ said in a note. That was the weakest growth since the first quarter of 2009 in the aftermath of the global financial crisis.

That truce is fragile, however, since the issues that caused talks to break down in May remain.

"As such risk assets will respond favourably but it's hard to escape the economic realities that the US-China trade war is having on global economies".

Tariff hikes by President Donald Trump have battered Chinese as well as USA exporters, and Chinese leaders have increased spending and loosened controls on bank lending to keep growth within this year's range of 6% to 6.5%.

Weaker Chinese activity has global repercussions. In June, factory output and retail sales growth beat estimates, while investment in the first half of the year also gave further evidence that stimulus measures to curb the slowdown are feeding through.

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Physical gold buying stalled in top Asian hubs last week as consumers sold back bullion to cash in on a steep price rally, while a recent import duty hike further dented waning interest in an Indian market hit by a surge in local rates.

Monday's growth data marked a loss of momentum for the economy from the first quarter's 6.4%, amid expectations that Beijing needs to do more to boost consumption and investment and restore business confidence.

A breakdown of the data showed the output of the service sector, which accounted for 54.9 percent of the total GDP, rose 7 percent in the first half, outpacing a 3-percent increase in the primary industry and a 5.8-percent rise in the secondary industry.

Data on Friday showed exports fell in June after the USA sharply hiked tariffs on Chinese goods, while imports shrank more than expected, highlighting sluggish domestic demand. He said that was likely to worsen because a boom in real estate development is fading.

Beijing is pumping money into the economy through higher spending on building highways and other public works.

Credit growth to support that has accelerated to dangerously high levels, according to Iris Pang of ING.

"That said, we believe the PBoC will still be supportive of liquidity".

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