Q2 Economic Growth Likely to Slow to 10.6%

BEIJING, July 14 -- China's economic growth is likely to slow to 10.6 percent in the second quarter as the effects of the government's massive stimulus package weaken, analysts are forecasting.

Pei Changhong, head of the Institute of Finance and Trade Economics of the Chinese Academy of Social Sciences, expected China's second-quarter growth to slow to 10.6 percent and the annual growth to reach 10.5 percent.

China, the world's third largest economy, posted economic growth of 11.9 percent in the first quarter, which analysts said was mainly supported by the country's massive economic stimulus package.

The country's GDP growth in the fourth quarter this year and the first quarter of 2011 might slow to around 9 percent, said Zhu Jianfang, chief macro economist with Citic Securities.

Zhu ruled out the possibility of a double dip for China's economy and said growth would show a U-shaped curve.

The latest economic indicator pointing to a slowdown in China's growth was the Purchasing Managers' Index for the manufacturing sector, which slowed for two consecutive months. The index stood at 52.1 percent in June, down 1.8 percentage points from May.

Growth in fixed assets investment, one of the major engines boosting China's growth, would witness an obvious deceleration in the third quarter this year, said Xing Weiwei, an analyst with the Jianyin Investment Securities.

Xing expected fixed assets investment to climb about 20 percent year on year during the July-September period, compared with an increase of 25.6 percent in the first quarter.

China unveiled a 4-trillion-yuan ($589.97 billion) economic stimulus package in late 2008 to counter the adverse impacts of global financial crisis. The spending was planned to the end of 2010.

The National Bureau of Statistics is scheduled to release a range of economic data on Thursday, including second-quarter gross domestic product growth, the consumer price index and fixed assets investment.