China's growth yet to regain pace Wen

China's gross domestic product rose 7.6 per cent in the second quarter, the sixth straight slowdown. Photo / AP
China's gross domestic product rose 7.6 per cent in the second quarter, the sixth straight slowdown. Photo / AP

China's Premier Wen Jiabao warned the momentum for a recovery in economic growth isn't yet in place and "difficulties" may persist for a while, the official Xinhua News Agency says.

Even so, the pace of economic expansion is within the targeted range and government measures to stabilise growth are "bearing fruit," the Premier is reported to have said.

The Xinhua article didn't mention government policies toward the property market.

Wen's comments follow data that showed Asia's largest economy had the weakest expansion in three years as Europe's fiscal crisis sapped exports and a crackdown on property speculation curbed domestic demand.

At the same time, a recovery in home sales and a jump in investment signalled lower interest rates and banks' reserve requirements may be starting to arrest the slowdown.

"It should be clearly understood the momentum for a stable rebound in the economy has not yet been established," Xinhua cited Wen as saying.

"We need to comprehensively assess the situation and recognise the problems, difficulties and risks, in particular the downward pressure on the economy."

He said the Government would step up policy fine-tuning in the second half to support growth.

China's gross domestic product rose 7.6 per cent in the second quarter from a year earlier, the statistics bureau said last week, the sixth straight slowdown.

Industrial production rose at a more moderate pace last month while retail sales growth slowed.

Nomura Holdings cut its China growth forecasts after the data.

The bank now estimates expansion of 8.2 per cent this year rather than 8.4 per cent, and a pace of 7.9 per cent next year, down from an earlier prediction of 8.2 per cent.

Wen in March set a 2012 growth goal of 7.5 per cent, down from an 8 per cent target in place since 2005.

Separately last week, the People's Bank of China said weak global demand would hinder growth, with the world situation "extremely" complicated, according to the central bank's 2012 financial-stability report.

The PBOC announced the second cut in interest rates in a month on July 5 and has reduced banks' reserve requirement ratio three times starting in November.

Wen has pledged to "unswervingly" sustain property controls and prevent a rebound in prices.

The report on the Premier didn't contain any reference to the real estate market or property prices.

At an economic forum in Chengdu at the weekend Wen said the "fundamentals for economic development remain sound" and that "many bright spots are emerging in the course of development", according to Xinhua. "The drivers and potential for economic growth are still relatively large."

The "bumper harvest" over the summer had provided a solid foundation for stable economic growth, helping to stabilise prices, Wen said.

The monthly deceleration in prices "gives the government more scope for macro-economic controls", he said.

Inflation eased to 2.2 per cent last month from a year earlier, the lowest rate in 29 months, while producer prices fell for the fourth month, government reports on July 9 showed.

- Bloomberg

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