Early Monday, Xinhua reported that the GDP for the second quarter had slowed to 7.5%, as many economists had expected:
CHINA'S Q2 GDP GROWTH EASES TO 7.5 PCT
— Xinhua News Agency (@XHNews) July 15, 2013
Reuters earlier reported that the economic slowdown was predicted as Beijing pushes for reform:
A Reuters poll of forecasts by economists projected China’s economy grew 7.5 percent in the April-June quarter from a year earlier, slowing from 7.7 percent in January-March.
However, trade figures last week showing an unexpected fall in exports for the first time in 17 months raised market concerns GDP could be weaker than expected.
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. Before Monday’s figures, growth had already slowed in eight of the last nine quarters.[Source]
The Baltimore Sun adds that Beijing’s leaders are willing to allow for slower growth in order pursue reforms but that a potential increase in job losses “could set off alarm bells for policymakers, worried about any threats to social stability”:
Financial markets may have underestimated the leadership’s tolerance for slower growth as it pushes to wean the economy off a reliance on exports and investment with reforms and deregulation to encourage more consumption, analysts say.
“The focus is still on reforms,” said Xu Hongcai, senior economist at the China Centre for International Economic Exchanges (CCIEE), a well-connected think-tank in Beijing.
“The chances of a cut in interest rates or banks’ reserve ratio look slim,” Xu said. “Previously, when the economy was not good, local officials held out their hands for money from the central government. But now they have to embrace reforms as no money will be given.[Source]
Job losses have already struck Chinese citizens. BBC reports on the loss of jobs at a once promising Rongsheng shipyard, where there is “simply not enough global demand for new ships and, as in other industries in which China has over-invested”:
A decade ago, from almost nothing, China declared that it wanted to be the biggest shipbuilding nation in the world by 2015.
But today Rongsheng is a symbol in another, much less welcome sense.
Much of the yard is idle and 20,000 workers have been laid off over the past two years.[Source]