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China's Economic Growth Slows
The Chinese economy grew at a slower pace in the second quarter, continuing a trend that will test the leaders of the countries where they seek to perform painful structural reforms.

Gross domestic product increased by 7.5% over the previous year in the second quarter, the national Bureau of statistics reported on Monday. This performance corresponds to the target set by the Government and the consensus of private forecasters estimate. Q1 2013 growth rate was 7.7%.

Initial reaction of the market in Asia has been muted, with most indices in positive territory after the liberation.

GDP is closely monitored in China because it provides the most comprehensive portrait of the second largest economy of the world, and of the representatives of the Government to use it as a benchmark to assess the performance.

China has experienced an average growth of about 10% per year over the past three decades, propelling the list of the largest economies, generating wealth for its growing middle class and to stimulate world trade.

But many economists say now that the Chinese economy relies too heavily on investment, a trend that has distorted the real estate market in the country and focused on exports on consumption. In addition, the rules governing the country's stock markets make it difficult raising capital for companies.

And the State enterprises that dominate whole sectors of the Chinese economy, are too often favourable loans and treatment of Government beneficiaries.

Related story: the leaders of slowing economic tests China

Current leadership of China is attempting to run a series of structural economic changes that will help address these challenges and move the country towards a more sustainable growth model.

The way forward, most analysts agree, requires China to move towards an economy where consumption stimulates growth.

President Xi Jinping and Premier Li Keqiang are all accounts determined to pursue reforms, even if it means tolerating a slower growth for now.

Inflation, a problem in 2012, has been cultivated so far this year.

The key issue of the moment, this is how the economy can slow down until the Government intervenes to support growth.

Wei Yao, Economist at Société Générale, said Monday that data on GDP is unlikely to attract new Beijing stimulus measures.

"Signs of a significant recovery of China's domestic demand remained limited, but the degree of deceleration is probably acceptable for the new direction", said Yao.

Many analysts are not optimistic that the economic expansion will resume the momentum in the coming months.

The Bank economists Nomura based in Japan, for example, said before the publication of GDP that it is 30% chance that growth will be less than 7% in the second half of the year.
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