China economic growth slows in second quarter, warns on trade war

China today said its economic growth slowed slightly in the second quarter as a trade war with the United States gained pace, while it warned of the global damage that could be caused if the row persists.

The world's second-biggest economy expanded 6.7 per cent in April-June, down from 6.8 per cent in the first quarter and in line with a forecasts in an AFP survey of economists.

The data was released just as European Council President Donald Tusk said at an EU summit with China in Beijing that trade tensions could spiral into a "hot conflict", calling on the US, China and Russia to find a resolution.

Despite the quarterly deceleration, growth was still higher than the annual target of around 6.5 per cent set by the government, but China nevertheless faces an "extremely complex environment both at home and abroad", said Mao Shengyong, a spokesman for the national statistics bureau.

Beijing faces a multi-front battle to defend its economy, fighting to cut its debt mountain while the yuan currency and Chinese stock markets tumble.

"World trade protectionism continues to heat up, posing a major challenge to the world economic recovery and adding challenges and uncertainties for us," Mao said. "From our domestic perspective, economic development has still been unbalanced and unstable, and is still in the process of structural adjustment and transformation."
"China's economy appears to be on a slowing path. The government seems to be easing policy gently... despite its goal of minimising financial risks," said Alaistair Chan of Moody's. "Trade disputes with the US have hurt market sentiment, and investment is also cooling."
"The upshot is that the statistics bureau is now starting to more publicly acknowledge that the economy is losing steam," said Julian Evans-Pritchard, China economist at Capital Economics, wrote in a research note. "This should make it easier for officials to justify shifting to a more supportive policy stance."