China's frail Q2 GDP growth puts pressure for more policy support

Chinese authorities face a daunting task in trying to keep the economic recovery on track and putting a lid on unemployment, as any aggressive stimulus could fuel debt risks and structural distortions.

"The data suggests that China's post-COVID boom is clearly over," said Carol Kong, economist at Commonwealth Bank of Australia in Sydney. Authorities are likely to roll out more stimulus steps including fiscal spending to fund big-ticket infrastructure projects, more support for consumers and private firms, and some property policy easing, policy insiders and economists said. But analysts say a quick turnaround is unlikely.

"At this pace of deceleration, there's now actually a risk that the growth target may not be achieved - this 5% may not be achieved if the economy continues to decelerate at this pace. So I think this does raise greater urgency for more policy support soon."

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