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China’s second quarter GDP growth slowed to 7.6% year-on-year, its lowest rate for three years. For the entire first half of the year, China’s productivity grew 7.8%, so far beating China’s full-year target of 7.5%
China is clearly not oblivious to the sliding growth. Beijing has cut interest rates twice within about two months to lower the borrowing cost in the economy and slashed the reserve requirement ratio three times late last year to pump liquidity back into the banking system.
There are indications this is working. China's new renminbi-denominated loans grew in June to Rmb285.9 billion ($45 billion) year-on-year to Rmb919.8 billion, according to the People's Bank of China.
M2, a broad measure of the amount of money in circulation, increased 13.6% to Rmb92.5 trillion at the end of June. The growth was faster than the 13.2% in May, but still lower than the 14% set by the government for the year.
Preliminary data also indicates China's social financing, a measure of funds raised by comopanies in the real economy, amounted to Rmb7.78 trillion in the first six months, slightly up on the same period of last year.