China's second-quarter GDP growth slows to 27-year low

China's economic growth slowed to 6.2% in the second quarter, the lowest in 27 years, as domestic and foreign demand eased amid growing US trade pressures.

While a more optimistic June factory output and retail sales showed signs of improvement, some analysts warned that growth could be volatile and expect Beijing to continue to impose additional support measures in the coming months.

China's trading partners and financial markets are keeping a close eye on the state of the world's second-largest economy as the Sino-US trade war becomes longer and more costly, fueling fears of a global recession.

Yesterday's growth data marked a loss of momentum for the economy from 6.4% in the first quarter, adding to expectations that Beijing needs to do more to boost consumption and investment and restore business confidence.

April-June, in line with analysts' expectations, was the slowest since the first quarter of 1992.

"In the second half of the year, China's growth may slow to 6-6.1%," said Nie Wen, economist at Hwabao Trust. And it will test the lower end of the target range of Beijing in 2019 - 6-6.5%.

Incentives for the Economy

Beijing has relied heavily on fiscal stimulus to prop up growth this year, announcing significant tax cuts of nearly two trillion yuan ($ 291 billion) and a 2.15 trillion yuan quota for local government special bond issuance accelerating the construction of infrastructure.

However, the economy is slow to respond and business sentiment remains cautious.

Trade pressures have intensified since Washington sharply raised tariffs on Chinese goods in May. While the two sides have since agreed to reopen trade negotiations and refrain from further retaliatory action, they remain divided on important issues needed to reach an agreement.

Despite the trade dispute, net exports accounted for an astounding 20.7% of GDP growth in the first half of the year as Chinese exporters rushed to sell ahead of higher US tariffs and imports fell more sharply amid weaker domestic demand.

Exports and imports fell in June, and an official poll showed factories were cutting jobs at the fastest pace since the global crisis a decade ago.

Analysts say the scope for more aggressive monetary easing is limited by concerns about rising debt levels and structural risks.

Moreover, the June data on industrial production, retail