China’s economy edged up 7 percent in the April to June quarter, matching first quarter growth, according to data released on Wednesday by China's National Bureau of Statistics. However, the unexpected stock market crash towards the end of the second quarter has led to calls for further stimulus.
Although the world's second largest economy saw many draw back this year with contracting growth in trade, weak investment and domestic demand, monthly data still managed to beat expectations, showing an upswing in China’s economy. Along with stable gross domestic product (GDP), industrial production increased 6.8 percent in June, hitting a five month high, while retail sales rose 10.6 percent, ahead of forecasts.
Nevertheless, Chinese policy makers are still expected to intervene and pump further liquidity into the economy, as volatility in the country’s stock market continues to alarm investors and is leading to financial turbulence in the country.
China’s bureau of statistics described the overall atmosphere of the economy as strengthening, but also warned that, “we must be aware that the domestic and external economic conditions are still complicated, the global economic recovery is slow and tortuous and the foundation for the stabilization of China's economy needs to be further consolidated," it said in a press release delivered in English.
In order to spur economic growth, the People's Bank of China (PBOC) cut interest rates and the reserve requirement ratio (RRR) for some lenders in May, marking the fourth round of such action since November. China rarely cuts both interest rates and RRR at the same time, the last time this occurred was in December 2008, during the peak of the global financial crisis.