China's Growth Seen Outpacing Target, Easing Stimulus Pressure

Official figures likely to show GDP up 5.1 per cent year on year in quarter ended June

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China's economy likely expanded just above the government's full-year growth target in the second quarter, easing pressure on Beijing to roll out additional stimulus in the near term.

Official figures due on July 15 are expected to show gross domestic product (GDP) rising 5.1 per cent year on year in the quarter ended June, a Bloomberg survey shows.

While slower than the first quarter, it would still put first-half growth at 5.3 per cent, comfortably above Beijing's annual target of around 5 per cent, according to the survey.

The economy got a boost from strong exports, helped by a trade truce with the US in mid-May that lowered tariffs on Chinese goods to around 55 per cent from a peak of 145 per cent, as well as ongoing fiscal support aimed at shoring up domestic demand.

That momentum has many economists expecting Beijing to hold off on further stimulus, at least for now, to preserve policy space in case tensions with Washington flare up again once the temporary deal expires in mid-August.

"We see limited urgency for policymakers to strike the policy put soon," Citigroup economists wrote in a note on July 10.

An upcoming July meeting of the Communist Party's Politburo, which includes 24 of the country's most senior officials led by President Xi Jinping, could "further confirm a wait-and-see policy mode, while keeping the door open for incremental small-scale support", the Citi economists said.

The People's Bank of China (PBOC) has indicated a less dovish stance on easing. In a statement after its quarterly monetary policy committee meeting in June, the central bank dropped its earlier pledge to cut rates and inject long-term liquidity in a timely manner, saying instead it would "calibrate the intensity and pace of policy implementation" with flexibility.