Property prices weigh on GDP

China's real estate data for July show the sector is deteriorating. For instance, sales of residential housing by area fell 7.6 percent year-on-year over the first seven months of 2014. Meanwhile, new home prices declined in 64 of 70 major cities in July.

Recent research by Standard Chartered found that real estate developers' financing costs and stockpiles have been increasing rapidly.

Several local governments have relaxed restrictions on the real estate market and launched incentives to boost sales such as tax subsidies and looser mortgage requirements. However, they haven't had much of an effect.

The US Federal Reserve recently estimated that real estate's contribution to China's economic growth will drop by 0.9 percentage point in 2014. Consequently, GDP growth could drop to 6.8 percent this year without extra stimulus to offset the estimated loss.

Based on July's disappointing economic data, growth is expected to slow in the third and fourth quarters, making it difficult for China to meet the government's 7.5 percent GDP growth target for this year. To ease the growing pressure on the economy, the government could reduce its economic growth target for next year.