"There is a rising urgency for more policy easing," Shen Jianguang, chief Asia economist for Mizuho Securities Asia Ltd. in Hong Kong, said before the release. The government will have to act "decisively" to stem the slowdown, said Shen, who previously worked for the International Monetary Fund.
The government is likely to cut benchmark interest rates once and banks' reserve-requirement ratio twice more this year, Shen said. A pickup in credit and easing of local-government financing curbs may aid investment growth, helping the economy rebound in the second half, he said.
China's export growth in the first half cooled to 9.2 percent, down from 24 percent in the first six months of 2011, as Europe's austerity measures and government debt burdens capped shipments. Also dragging on demand is the crackdown on housing-market speculation. Any failure to secure a rebound this quarter may increase pressure on Wen to ease property controls.
Estimates for growth in the world's second-biggest economy in a Bloomberg News survey of 38 analysts ranged from 7.3 percent to 9.3 percent, with all except one predicting a slowdown from the first quarter.
First-half expansion was 7.8 percent, the statistics bureau said. Wen in March set a 7.5 percent growth target for this year, down from an 8 percent goal in place since 2005.
Gains in the yuan have halted this year amid the economic slowdown. The currency weakened 1.2 percent against the dollar through yesterday after strengthening 4.7 percent in 2011. The benchmark Shanghai Composite Index has dropped 22 percent over the past 12 months, compared with a 16 percent decline in the MSCI Asia Pacific Index.
The People's Bank of China on July 5 announced the second interest-rate cut in a month, adding to the first since 2008. The central bank also widened the discount available to most borrowers to 30 percent from 20 percent off the benchmark rate. Authorities have lowered banks' reserve requirements three times starting in November to spur lending and support growth.
Wen pledged to intensify fine-tuning of policies as downward pressure on the economy remains "relatively large," according to a July 8 report by the official Xinhua News Agency. At the same time, the premier said authorities will "unswervingly" sustain property controls and prevent a rebound in prices, Xinhua said.
U.S. companies are feeling the effects of China's deceleration. Advanced Micro Devices Inc., the second-biggest maker of processors for personal computers, this week reported an unexpected drop in quarterly sales in part because of weakness in China. Cummins Inc., a maker of truck engines, reduced its revenue forecast, saying demand in Brazil, China and India isn't improving as the company anticipated.
China's industrial production expanded 9.5 percent in June from a year earlier, the statistics bureau said, comparing with the 9.8 percent median estimate in a Bloomberg survey. Fixed- asset investment excluding rural households increased 20.4 percent in the first six months from a year earlier, the data showed, versus 20.1 percent in the first five months and a 20 percent forecast.
Promoting investment growth is key to stabilizing the economic expansion, Wen said during meetings with economists and company executives July 9 and 10, according to a government statement. The remarks may signal public investment is likely to rise in the coming months, Nomura Holdings Inc. said.
Retail sales advanced 13.7 percent last month from a year earlier, compared with the 13.4 percent median forecast of economists. Data earlier this week showed that imports rose less than estimated in June while export growth slowed and new yuan loans topped predictions.
The slowing economy has hurt corporate earnings and taken a bigger toll on companies in building-materials industries.
Angang Steel Co., China's largest Hong Kong-traded producer of the alloy, said July 6 that it probably swung to a loss in the first half after prices plunged. The cost of steel fell this month to the lowest in two years.
Sany Heavy Industry Co., China's biggest maker of excavators, lowered its annual unit-sales forecast, Vice Chairman Xiang Wenbo said in a July 11 interview. The government "has enough capability to maintain economic growth," Xiang said.
The expansion may have bottomed out last quarter, Ding Shuang, a Hong Kong-based economist with Citigroup Inc., said before the release. Inflation, which eased to a 29-month low of 2.2 percent in June, allows more room for policy easing, said Ding, who previously worked for China's central bank.
Rio Tinto Group, which counted on China for 31 percent of its $61 billion in sales last year, expects growth in the nation to accelerate in the second half on the recent fiscal and monetary loosening, Vivek Tulpule, chief economist of the world's third-largest mining company, said in London on June 29.