Gross domestic product rose 6.2.% in the April-June period from a year earlier, below the 6.4% expansion in the first quarter and matching economists’ estimates. In June, factory output rose 6.3%, retail sales rose 9.8%, while investment gained 5.8% in the first half of the year — all three beating estimates.
The slowdown adds to the pressure Chinese policy makers face as they attempt to negotiate a deal with the U.S. while balancing the objective of job creation with the need to defuse financial risks at home. Although Chinese negotiators are talking with their U.S. counterparts again, there is no certainty that a deal will be reached.
“We expect Beijing to ramp up stimulus measures in the second half despite more limited policy room, though markets should not put too high expectations on the scale and duration of these stimulus measures,” Nomura International economists led by Lu Ting wrote in a recent research note. “Domestic policies will to a large extent be dependent on the U.S.-China trade tensions.”