Trump sees slowing Chinese economic growth

WASHINGTON, July 15 (Reuters): US President Donald Trump on Monday pointed to slowing economic growth in China amid restarted trade talks, saying US tariffs were having "a major effect" and warning that "possibly much more" were to come.

Growth data released earlier on Monday showed the world's second-largest economy had slowed to 6.2 per cent in the second quarter, its weakest pace in at least 27 years amid ongoing trade pressure from the United States.

"This is why China wants to make a deal with the US, and wishes it had not broken the original deal in the first place," Trump tweeted.

Trump and his administration are seeking to push China to make a trade pact after talks broke down in May. Trump and Chinese President Xi Jinping agreed to restart negotiations at their meeting at the G20 last month.

US and Chinese negotiators spoke by phone last week, and in-person talks are expected soon in Beijing, US officials have said.

Meanwhile, China's economic growth slowed to 6.2 per cent in the second quarter, its weakest pace in at least 27 years, as demand at home and abroad faltered in the face of mounting US trade pressure.

While more upbeat June factory output and retail sales offered signs of improvement, some analysts cautioned the gains may not be sustainable, and expect Beijing will continue to roll out more support measures in coming months.

China's trading partners and financial markets are closely watching the health of the world's second-largest economy as the Sino-US trade war gets longer and costlier, fuelling worries of a global recession.

Monday's growth data marked a loss of momentum for the economy from the first quarter's 6.4 per cent, adding to expectations that Beijing needs to do more to boost consumption and investment and restore business confidence.

The April-June pace, in line with analysts' expectations, was the slowest since the first quarter of 1992, the earliest quarterly data on record.

"China's growth could slow to 6 per cent to 6.1 per cent in the second half," said Nie Wen, an economist at Hwabao Trust. That would test the lower end of Beijing's 2019 target range of 6-6.5 per cent.

Cutting banks' reserve requirement ratios (RRR) "is still very likely as the authorities want to support the real economy in the long run," he said, predicting the economy would continue to slow before stabilizing around mid-2020.

China has already slashed RRR six times since early 2018 to free up more funds for lending, and analysts polled by Reuters forecast two more cuts by the end of this year.

Beijing has leaned largely on fiscal stimulus to underpin growth this year, announcing massive tax cuts worth nearly 2 trillion yuan ($291 billion) and a quota of 2.15 trillion yuan for special bond issuance by local governments aimed at boosting infrastructure construction.

The economy has been slow to respond, however, and business sentiment remains cautious.

Trade pressures have intensified since Washington sharply raised tariffs on Chinese goods in May. While the two sides have since agreed to resume trade talks and hold off on further punitive action, they remain at odds over significant issues needed for an agreement.