China's second-quarter GDP growth exceeds expectations

Gladys Abbott
July 17, 2017

"According to the preliminary estimation, the gross domestic product (GDP) of China was 38,149.0 billion yuan [$5,632 billion] in the first half of 2017, a year-on-year increase of 6.9 percent at comparable prices".

The better-than-expected figures mean China is on track to beat the growth target of "around 6.5%" set by the country's leadership for the whole year.

In the first half of this year, steel output totaled 419.75 million tonnes, up 4.6 percent from the same period in 2016, data from the National Statistics Bureau showed.

Retail sales rose 11 percent in June a year earlier, higher than analysts' estimate of 10.6 percent.

With risks rising in some parts of the economy due to leveraged investments and over-borrowing, officials need to carefully balance support for growth with risk controls.

Analysts polled by Reuters had expected the economy to expand 6.8 per cent in the April-June quarter, slightly slower than the pervious quarter's robust 6.9 per cent pace.

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China's strong momentum has fueled global economic expansion and boosted sentiment in worldwide markets. The retreat of United States long-term interest rates since early 2017 and the Fed's commitment to a gradual pace of interest rate hikes are maintaining supportive monetary conditions for emerging market growth.

President Xi Jinping has called for even tougher regulations to reduce the country's vulnerability though the GDP figures suggested there was no cause for immediate alarm - given stronger export growth and a jump in new orders.

China eliminated around 120 million tonnes of low-end steel capacity in the first six months of this year.

He cited tightening policies in the property market and the government's deleveraging campaign which may affect the second half of the year, he added.

The Chinese government has intensified efforts to fight pollution and use more clean energy.

Consensus estimates had pegged growth at 6.8 per cent, but a strong pick-up in quarter-on-quarter growth, from 1.3 per cent to 1.7 per cent, assured the headline measure remained unchanged.

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