The expansion of China's exports and consumption may decelerate further in the second half of the year due to weak overseas and domestic demand, adding headwinds to overall economic growth, a research center with the country's top economic planning body has forecast.

The outlook was issued by the State Information Center on Wednesday, which is under the National Development and Reform Commission.

China's exports may decline further in the second half of this year, dragging down annual export growth to 9 percent and creating a trade surplus at the end of the year of possibly $280 billion, according to an official forecast. YU FANGPING / FOR CHINA DAILY

The center said that during the second half of 2013, the total value of China's trade might increase more slowly than it did in the first half, affected in part by the emerging effects of a stronger yuan.

It forecast full-year export growth would be about 9 percent, down from 10.4 percent in the first half, while imports might rise 7.3 percent, compared with 6.7 percent in the first half.

The full-year trade surplus is likely to widen to $280 billion by the end of this year, from $108 billion in the first half, the center said.

"Weak external and domestic demand will remain the key factors increasing the downside risks for China's economy in the third and fourth quarters," said Lian Ping, chief economist at the Bank of Communications Ltd.

In addition, as household incomes are likely to increase more slowly and property prices remain high, consumer confidence could weaken and curtail consumption.

The center forecast that full-year retail sales may increase by a nominal 13 percent, but the real rate of growth may be 11.3 percent, which would be slower than in the first half.

According to the National Bureau of Statistics, retail sales increased by a nominal 12.7 percent in the first half.

Policymakers are likely to announce further reforms in the coming months to foster consumption as a new economic growth engine, the center said.

A report from the Bank of Communications indicated that last month, household wealth was at its lowest point so far this year, depressed by slower economic growth and weak capital markets.

Moreover, slowing income growth has started to weaken household spending plans, which may further cool retail sales, the bank said.

"There is still considerable uncertainty about the near-term growth outlook," said Zhu Haibin, chief economist in China with JPMorgan Chase & Co.

"We expect more fine-tuning measures in the coming months. The scale and pace of policy fine-tuning will be important to gauge the growth outlook in the second half," said Zhu.

He said the fine-tuning will also be indicative of the reform agenda expected to be announced at a plenary session of the decision-making Central Committee of the Communist Party of China to be held late this year.

In July, the State Council attempted to restore market confidence by combining the targets of stable growth and economic restructuring.

Wendy Liu, an analyst from Nomura Securities Co Ltd, said on Wednesday that high-end consumption is likely to be restrained by a long-term anti-corruption campaign.

However, consumption in the mass market is likely to demonstrate steady improvement in the second half.

"More money may be spent on customized and high-quality products and services, and companies involved in e-commerce, online games and smartphones may perform better in the capital markets," Liu said.

Although recent economic indicators were disappointing and even aroused market worries about a hard landing, "I think the concern is unnecessary", said Qu Hongbin, chief economist in China with HSBC Holdings Plc.

"The government now still has room to pursue moderate and mini-stimulus (programs) to avoid growth slipping below the bottom line."

Qu said that the most important factor that can stabilize growth of the world's second-largest economy is the huge potential of urbanization.

The process is likely to transform 260 million rural migrant workers into urban consumers and boost domestic demand.