China's GDP growth rate for the second quarter was 4.3%, falling short of expectations. However, analysts predict that the country will not announce any major stimulus measures or interest rate cuts.
Xiong Yuan, chief economist at Guosheng Securities, stated, "It is unlikely that strong economic stimulus measures will be introduced at the Politburo meeting at the end of this month," according to a report by the Jiemian newspaper on July 30.
Xiong noted that while the second quarter growth rate of 4.3% is below the government's GDP growth target of 4.5% to 5.0% for the year, the growth rate for the first half of the year stands at 4.7%, which is within the target range. He added, "To achieve the annual GDP growth target of 4.5%, the GDP growth rate in the second half only needs to exceed 4.3%, making it feasible to meet this year's goal." He explained that this is why China is unlikely to implement a large-scale stimulus and will focus on effectively utilizing existing policies.
He also pointed out that recent statements from high-ranking officials indicate a distance from major stimulus measures. On July 13, Premier Li Qiang emphasized during a forum that existing policies should be effectively utilized and that any additional stimulus measures should be proactively researched and prepared. Zheng Shanjie, head of the National Development and Reform Commission, also mentioned the need to maximize the synergy of existing policies.
Xiong remarked, "Recent high-level officials have all stressed the importance of effectively utilizing and implementing existing policies in a timely manner. Additional large-scale stimulus measures will be announced as needed based on specific circumstances."
The likelihood of interest rate cuts in the second half of the year is also considered low. Wen Bin, chief economist at Minsheng Bank, stated, "Unless there is a significant slowdown in exports, which currently support the Chinese economy, or a rapid deterioration in the economy, the chances of a policy rate cut in the second half are slim. In the current situation, the People's Bank of China will maintain sufficient liquidity and focus on using policy tools to support development in key areas."
* This article has been translated by AI.
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