Published: Mon, July 17, 2017
Markets | By Noel Gibbs

China reports 6.9% second-quarter GDP growth on year, topping expectations

China reports 6.9% second-quarter GDP growth on year, topping expectations

Industrial output for June grew by 7.6 percent, well above the forecast of 6.5 percent, and retail spending rose by 11 percent compared to June the previous year. The string of growth will set the groundwork for the government to tackle economic challenges ahead of the re-selection of China's Central Committee later this year.

The growth rate is well above the government's target for the year of 6.5 per cent, reflecting a firming trend in the nation's economy.

China's growth domestic product (GDP) in the second-quarter rose 6.9 percent, well above Beijing's 6.5 percent target for the year.

"We do have doubts about how sustainable the recovery is", said Julian Evans-Pritchard, a China economist for Capital Economics, adding that the economy has "been very reliant" on government stimulus, rapid credit growth and a relatively loose monetary policy.

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The PBOC shifted to a modest tightening bias at the start of this year, guiding market interest rates higher during the first quarter, including immediately after the U.S. Federal Reserve raised rates in March.

Fixed asset investment year-to-date came in at 8.6%, the same as in May (consensus: 8.5%).

It accelerated to 7.9 percent in June from a year earlier, compared to a 7.3 percent expansion in May, according to Reuters calculations based on NBS data.

Despite the notion that China's GDP print retains a lack of transparency, markets around the region are likely to stay buoyed, say traders, should the high frequency industrial production, retail sales and fixed asset investment numbers - also released on Monday - track positively alongside GDP.

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However, buyer demand appeared to be more resilient than expected, reinforcing analysts' views that China's property market is unlikely to suffer a hard landing as some have anxious.

The composition of Chinese exports also changed in ways that could intensify trade friction and affect China's trade surplus.

"The national economy performed within an appropriate range with more visible good momentum and achieved steady growth, rise in employment, stable prices, income growth and optimizing structures", said the NBS.

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