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Tepid economic activities in June

China's economic performance may continue to be tepid in June with trade staying lackluster while industrial production and retail sales showing little improvement, analysts said before the release of key activity data starting next week.

"We expect June's economic data to be weak again," said Wang Tao, chief economist for China at UBS. "The sluggish real economy, though stabilizing at a low level, is prompting the authorities to escalate policy supports."

Tang Jianwei, an economist at Bank of Communications, said China's economy has hit the bottom in the second quarter, but there were only signs of stabilization, not of a notably rebound.

"Nearly all indicators were moving towards the better side, but with very small steps ahead," Tang said.

Wang expected industrial production likely softened again in June, capping the second-quarter economic growth at 6.9 percent, while Tang said industrial production growth may accelerate to 6.4 percent, a bit better than the rate of 6.1 percent a month earlier.

The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in the manufacturing sector, remained unchanged at 50.2 in June, indicating marginal expansion in large state-owned industrial companies.

The property sales may have continued to charge ahead in June thanks to the removal of restrictions on purchasing, but new starts may struggle in recession under large inventory overhang, Wang said.

"As a result, both current construction and property investment should remain anemic at low single-digit growth," Wang said.

Trade may become a source of disappointment again.

"Exports probably resumed a feeble growth, while lackluster domestic demand may continue to undercut June's imports," Wang said.

"Overall, the languishing activity in the second quarter, marked by limp production and sluggish demand, has put this year's growth target under risk," Wang said.

To buttress the economy, China has continued escalating policy supports during the past months, taking pragmatic measures such as cut of interest rates and reserve requirement ratio to bolster market liquidity, while speed up various projects.

 




 

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