Goldman Flags China Stimulus Risk as Growth Slips Below Target

China's economic growth has slowed to around 4% year-on-year in the early weeks of the third quarter, according to Goldman Sachs, sparking expectations that policymakers will need to step up monetary easing.

The slowdown is attributed to softening demand rather than supply constraints, with July's weakness in industrial output, consumption, and investment pointing to a more concerning deceleration than earlier in April.

Goldman's chief China economist Hui Shan warned that Beijing's continued emphasis on technological innovation and high-tech manufacturing is unlikely to lift incomes or consumption meaningfully, as manufacturing accounts for only about one-fifth of Chinese employment.

Premier Li Qiang has called on the government to ramp up supportive measures to meet annual development targets, with officials considering loan subsidies and other financing support for businesses and consumers.