China’s economy grew at the slowest pace since 2005, handing more ammunition to Chinese officials calling for reduced gains by the yuan as the export outlook dims.

Gross domestic product rose 10.1 percent in the second quarter from a year earlier, down from 10.6 percent in the first, the statistics bureau said today in Beijing. Consumer prices rose 7.1 percent in June, slowing from 7.7 percent in May.

The yuan had the biggest drop in seven weeks on speculation China’s leaders will slow its advance to protect jobs at exporters after a 7 percent increase against the dollar this year. The Ministry of Commerce has urged China’s cabinet to rein in currency gains and raise some export rebates, a ministry official said July 14, speaking on condition of anonymity.

“The performance of the export sector could influence the government’s approach to pacing the appreciation of the yuan,” said Jing Ulrich, JPMorgan’s chairwoman of China equities. “A slower pace of appreciation would mean breathing room for the export sector, but at the cost of containing imported inflation from higher commodity prices.”

The yuan fell to 6.8276 versus the dollar as of 11:51 a.m. in Shanghai from 6.8113 yesterday, the biggest decline since May 27.

GDP growth cooled for the fourth straight quarter. The median estimate of 18 economists surveyed by Bloomberg News was for a 10.3 percent expansion. The U.S. economy grew 2.5 percent in the first quarter.

Continued at Bloomberg.com

Bloomberg