China's Q2 GDP growth likely to slow to 7.5%

BEIJING - China's economic growth is expected to further slide from a 13-year low as credit tightening and overcapacity continue to weigh on the world's second largest economy.

China's GDP growth is estimated at 7.5 percent in the second quarter, from 7.7 percent for the January-March period, according to analysts' forecasts.

An economic slowdown may prompt the government to roll out more reforms after the Chinese economy last year expanded at the slowest pace since the Asian financial crisis in 1997.

"We maintain our Q2 GDP growth forecast of 7.5 percent, which is lower than the 7.7 percent in Q1," said Barclays China economist Chang Jian on Monday.

Chang said the manufacturing PMIs confirmed a further slowdown in industrial activities. She forecast year-on-year industrial production growth to drop to 9 percent in June.

HSBC PMI readings indicated manufacturing, which accounts for 40 percent of China's GDP, contracted in May and June.

Lu Zhengwei, chief economist with Industrial Bank, forecast new lending in June to be around 800 billion yuan ($129.45 billion).

China International Capital Corporation Ltd said in an earlier report that the economic growth rate for the second quarter will be 7.5 percent due to weak investment, exports and overall demand.

Li Huiyong, chief economist at Shenyin Wanguo Securities, forecast the economic growth rate to be 7.6 percent in the second quarter due to slower growth in the industrial sector and exports.

Data for GDP growth in the second quarter is due on July 15.

China has targeted 7.5 percent economic growth and 3.5 percent inflation this year.

Its economic growth eased to a 13-year low of 7.8 percent in 2012. The government cooled the inflation rate to 2.6 percent year on year in 2012 from 5.4 percent in 2011.