China's GDP growth slowed in the second quarter to 7.5 percent year-on-year as weak overseas demand weighed on output and investment, lining up a test of Beijing's resolve to revamp the world's second-biggest economy in the face of downward data.
The statistics bureau said on Monday (July 15) that the latest slowdown was also a result of steps taken by China's new government that will benefit its economy in the long run.
New Premier Li Keqiang has been prominent in pushing for economic reform over fast-line growth, suggesting the government is in no rush to offer fresh stimulus to revive an economy in a protracted slowdown.
With the latest GDP data, China's growth has slowed down in nine of the last 10 quarters.
For now, economists do not see any major stimulus or policy shift and instead expect the government to tough out the slowdown as they pursue a longer-term vision of reforming the economy towards consumer-led, rather than export- and investment-led growth.
Nomura economist, Rob Subbaraman explained the risk with relaxing monetary measures.
"I think the implication for policy near term is we still think it is best to keep the broad policy measures on the tight side. The biggest danger we see for China is, just because growth is starting to ease off, they suddenly relax all the monetary tightening measures, and we start to see debt building up again, the property market taking off again, and then it is very dangerous we think, because already the financial cycle is looking pretty excessive, and that can lead to a very severe recession if you have a crisis there," he said.
The latest data showed the economy grew 7.6 percent in the first half of the year from a year earlier, just ahead of the full-year target.
Presented by Adam Justice