(Yicai) July 9 -- China’s economy probably expanded at a 4.5 percent pace in the second quarter, down from 5 percent in the first three months of the year, as the country shifts from old to new growth drivers, according to the average prediction of chief economists polled by Yicai.

The mean forecast for full-year growth remained unchanged at 4.7 percent, this month’s survey of 14 leading economists in China also revealed. The National Bureau of Statistics is scheduled to release key economic data for June, the second quarter, and the first half on July 16.

China’s economic trajectory is increasingly tied to the strength of the artificial intelligence cycle, said Bank of China International’s Guan Tao.

If the AI boom reverses or external conditions change, the economy could face unexpected volatility, he warned. Policymakers should build policy buffers and prepare contingency measures in advance to better offset uncertainties from both domestic and global factors, he said.

China’s economic policy mix will likely continue to rely on a combination of more proactive fiscal support and a moderately accommodative monetary policy, according to Wang Han at Industrial Securities. With growth pressures intensifying last quarter, fiscal policy could be stepped up further in the second half, though the likelihood of further cuts to the reserve requirement ratio or interest rates remains low, he said.

The Yicai Chief Economists Confidence Index, compiled by the Yicai Research Institute to evaluate confidence in the economic outlook, fell to 49.7 in July from 49.9 in June, remaining below the boom-bust line of 50 for the second consecutive month. As a result, the economists expect economic policy support to ramp up in this half of the year to stabilize growth.

Fixed-asset investment likely fell 4.7 percent in the first six months from a year earlier, compared to a decline of 4.1 percent in the first five months, the economists predicted. They expect retail sales of consumer goods to have risen 0.2 percent in June from a year ago, up from May’s 0.6 percent drop, and industrial added value to have increased 4.5 percent, unchanged from the previous month.

Fixed-asset investment remains sluggish, as evidenced by the construction purchasing managers’ index remaining below the critical line and real estate market indicators -- such as new housing starts, sales, and developer funding -- staying negative, along with weak confidence among private investors, said Xie Yaxuan at China Merchants Securities.

Based on these factors, the decline in fixed-asset investment is expected to have widened a little in the first half versus the first five months, Xie added. But a sharp deterioration is unlikely, as projects continue to receive investment from local government bond and special treasury bond sales, he noted.

Due to a relatively low base of comparison in the year-earlier period, retail sales of consumer goods are expected to have returned to growth in June, said Industrial Bank’s Lu Zhengwei. There is also hope for an improvement in consumption in both the food and beverage and durable goods sectors to some extent, he noted.

June’s industrial value-added output was shaped by several competing forces, according to Zhao Wei at Shenwan Hongyuan Securities. Even though oil prices have largely fallen back, operating rates across the petrochemical supply chain remain historically low, suggesting that the impact of higher energy costs continues to weigh on industrial companies, he said.

But at the same time, production in the metallurgical and consumer-related industry chains improved last month, supported by stronger domestic and overseas demand linked to artificial intelligence development, Zhao pointed out.

Editors: Tang Shihua, Futura Costaglione