China economy stabilizing, additional policy support possible: report

A slew of official data points to the stabilizing Chinese economy, and slower growth could prompt additional policy support, said a report released by Swiss bank UBS.

Most headline numbers for the Chinese economy released during the past week were in line with expectations. While fixed-asset investment disappointed, imports surprised on the upside, and firmer domestic demand saw industrial output growth stabilize, according to the report.

On the downside, manufacturing and private investment weakened further in May, UBS noted, adding that pro-growth policies may intensify again once growth further slows

The bank expects the still strong property sector and the unfolding effects of earlier or ongoing easing measures to help strengthen sequential gross domestic product (GDP) momentum in the second quarter.

"We expect growth in the second quarter to be firmer than the first on a sequential basis, but not much improved on a year-on-year basis, and to lose steam later in the year," the report said.

The bank saw macro policies "staying on hold" until the fourth quarter, when slower growth may prompt additional support again, and maintain its full year GDP growth forecast of 6.6 percent.

China's GDP expanded 6.7 percent year on year in the first quarter, the slowest growth since the global financial crisis in early 2009. The official reading for the second quarter is expected in a month. Endi