An employee seals a stack of yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei
An employee seals a stack of yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei, Anhui province April 6, 2011. REUTERS

China's gross domestic product growth slowed down in the second quarter to the lowest rate in three years, due to a soft global demand, show the official data released Friday.

The data released by the National Bureau of Statistics reveal that China’s gross domestic product grew at 7.6 percent in the second quarter of 2012 compared to same period in the earlier year. China's GDP growth was 8.1 percent in the first quarter.

China had set its target at 7.5 percent for 2012. In 2011 and 2010, the economy grew by 9.2 percent and 10.4 percent, respectively.

This comes after it was reported earlier this week that China's trade surplus widened to $31.73 billion in June, up 42.9 percent as compared to the same month last year amid slower-than-expected growth in imports.

The continuing debt crisis in Europe and the tentative U.S. recovery have hurt the demand for exports, the key driver of China's economy. The International Monetary Fund (IMF) has warned that escalation of the euro zone debt problems could slash China's 2012 GDP growth in half.

In February, the World Bank said China's export- and investment-driven economic model, though successful for decades, was no longer sustainable and reforms were needed to prevent a sudden downturn. Beijing has said its goal this year would be promoting steady, robust economic development, keeping prices stable and guarding against financial risks by keeping money and credit supplies at appropriate levels while being cautious and flexible.

Earlier this week it was reported that the consumer price index of China rose 2.2 percent in June from a year earlier, down from 3 percent in May. The diminishing inflation should be good news, because it can help the government invigorate growth without much concern about rising prices.

Last week, the People's Bank of China (PBC) cut interest rates for a second time this year. The one-year benchmark lending rate will fall by 31 bps, taking it to 6 percent. This easing in the monetary policy is seen as a much-needed thrust to boost liquidity in the financial system and help the economy regain its growth momentum.