By Ellen Zhang and Kevin Yao

BEIJING (Reuters) – China’s economy likely grew 5.1 percent in the second quarter from a year earlier, a slowdown from a strong start in the first three months, due to weak consumer demand and fueling expectations that Beijing will need more stimulus.

While such growth would keep China’s full-year target of around 5% within reach, policymakers still must deal with an ongoing property crisis, weak domestic demand, a falling yuan and trade conflicts with the West.

The gross domestic product (GDP) of the world’s second-largest economy is expected to grow 5.0% annually in 2024, according to the median forecast of 82 economists surveyed by Reuters. Analysts then predict slower growth of 4.5% for 2025.

Analysts say a further slowdown in the second half of 2024 could prompt policymakers to ramp up economic support, which now relies largely on foreign demand.

Investors are looking forward to next week’s meetings of key party leaders to hear what policies are needed to address these challenges, which go beyond industrial upgrading.

Policy advisers also believe that China can implement tax and fiscal reforms that would allow indebted local governments to collect more tax revenues and thus ease the pressure on local finances.

Expected growth in the second quarter would be lower than the 5.3% growth in the first quarter and the weakest growth since the third quarter of 2023.

According to the Reuters poll, GDP growth will slow further in the third and fourth quarters to 4.8% and 4.7% respectively.

“Despite the ongoing housing crisis, the Chinese economy breathed a sigh of relief in the first half of the year on the back of robust exports, which in turn were driven by a number of rebalancing forces and policy measures in the real estate space,” Ting Lu, chief China economist at Nomura, said in a note on Wednesday.

However, he expected headline GDP growth could slow significantly in the second half of the year to 4.2% year-on-year, from around 5.0% in the first half, “unless Beijing steps up stimulus by significantly accelerating capital injections to complete unfinished, pre-sold homes.”

Authorities in May allowed local state-owned enterprises to buy unsold, completed homes, with the central bank setting up a 300 billion yuan ($41.23 billion) relending facility for affordable housing. Analysts say markets should now be more patient for additional property support measures.

China’s consumer inflation in June fell short of expectations, official data showed on Wednesday, suggesting deflation risks remain.

Analysts polled by Reuters estimate that consumer prices in China will rise 0.6% this year, well below the government’s target of around 3%, after which prices will rise 1.5% in 2025.

The government will release data on second-quarter GDP, retail sales, industrial production and investment in June at 02:00 GMT on July 15.


To cope with weak domestic demand and the real estate crisis, China has increased investment in infrastructure and poured money into high-tech manufacturing.

Central bank Governor Pan Gongsheng pledged last month to maintain a supportive monetary policy and said the bank would flexibly use policy tools, including interest rates and reserve requirements, to support economic development.

The central bank is likely to be reluctant to cut interest rates further, as aggressive easing could spark more capital flight from struggling Chinese financial markets and weigh on the yuan, which has fallen to a nearly eight-month low against the dollar.

It could also hit banks already struggling with margin pressure, leading to pay cuts for workers. Analysts say more job losses and pay cuts would increase deflationary risks.

Analysts polled by Reuters expect a 10 basis point cut in China’s one-year benchmark lending rate, as well as a 25 basis point cut in banks’ reserve requirements in the third quarter.

(For other stories from the Reuters Global Long-Term Economic Outlook Polls package:)

($1 = 7.2755 Chinese yuan)

(Poll conducted by Rahul Trivedi, Devayani Sathyan and Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Reporting by Ellen Zhang and Kevin Yao; Editing by Sam Holmes)