China's second quarter growth beats expectations at 6.9%

Marco Green
July 17, 2017

Studies over the years have found that China's national statisticians appear to overstate growth during periods of economic weakness and understate growth when the economy is booming.

During the second quarter of 2017, the Chinese economy grew by 6.9% year-on-year to about 38.2trn yuan (£4.3trn, $5.6trn), beating analysts' prediction by 0.1%.

In China, the fiscal year begins on January 1.

Industrial production grew 7.6 per cent in June while retail sales were up 11 per cent, both better than the previous month, according to the official data.

The government is aiming for growth of about 6.5 per cent in 2017, slightly lower than last year's actual 6.7 per cent, which was the weakest pace in 26 years.

The Communist Party has placed top priority on securing social and economic stability ahead of the congress, which is likely to consolidate President Xi Jinping's status as the most powerful Chinese leader in many years.

It is also on track to post its first annual acceleration in growth since 2010, with gross domestic product having expanded 6.7% in 2016.

There is fear that growing debt in the manufacturing sector could combine with overcapacity to drag the economy down, and there are also worries that large cities are now in the middle of a property bubble.

"Based on this data, there is no need for easing and no need really for tightening either because inflationary pressures are very much contained". A report on how - or if - the US will react could come as early as this week.

According to NBS, the service sector expanded 7.7 per cent year-on-year in the first half, outpacing a 3.5-per cent increase in primary industry and 6.4 per cent in secondary industry.

NBS' spokesman Xing Zhihong also suggested further growth in rebalancing the economy this year saying upbeat changes in the economy will rise, with the trend of stable and improving growth strengthening and expanding even more. The trade surplus widened from $US40.8 billion in May to $US42.8 billion in June.

The latest buying binge followed the release Chinese Q2 GDP earlier in the session, including news that crude steel output from the world's largest producer jumped to the highest level on record in June.

Other reports by Click Lancashire

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