China’s economic growth slowed to its weakest level since 1992 in the second quarter of the year – damaged by the country’s trade war with the US.
Official figures released in Beijing showed an annual rate of growth of 6.2% between March and June.
That represented a slowdown on the 6.4% achieved in the previous three months.
Analysts said the wider figures showed falling demand both at home and abroad as the wider global economy feels the effects of the tariff battle between the world’s two largest economies.
There is no end in sight to the trade war despite pledges of fresh talks following a G20 summit meeting a fortnight ago between president Donald Trump and his Chinese counterpart Xi Jinping.
The National Bureau of Statistics in Beijing said the economy faced a “complex environment both at home and abroad”.
Its figures pointed to quarterly slowdowns in key areas such as factory output, retail sales and car sales – while exports to the United States were down 7.8% in June alone on the same month a year ago.
Chinese leaders have stepped up spending and bank lending to shore up growth – with signs of a pick-up in retail sales in June as they attempt to shift the economy away from its historic reliance on industrial production to a more consumer-led model.
Experts said they expected the People’s Bank of China (PBoC) – the country’s central bank – to announce further stimulus in the coming weeks but that came with a health warning over further debt.
The PBoC’s assistance is likely to come in the form of lower reserve requirements for banks – essentially falls in the amount of cash banks must hold in reserve – rather than lower interest rates, they added.
Steve Cochrane, chief economist for the Asia Pacific region at Moody’s Analytics, said: “Shifting the reserve requirement down would be an easy thing for the PBoC to do. The trick is to try to channel any additional liquidity towards small enterprises and the private sector where they can do the most good.
“That may be harder said than done. I also think we are in a wait-and-see mode if the United States and China will get back together again.
“Our primary assumption for the second half is that the talks will resume. If they don’t, I would pull my growth forecasts for the second half down.”
Economists largely expect China to mirror the 6.2% growth rate in the final six months of the year.
The trade war has spooked financial markets several times but US values hit record levels again last week as hopes of an interest rate cut by the US Federal Reserve bolstered appetite for risk.
Chinese shares rose and the yuan strengthened after the economic figures were revealed – with the Shanghai Composite 0.8% up on the day.
Futures markets indicated a much flatter opening for stock markets in Europe and the United States.