China eco­nomic ex­pan­sion ex­ceeds es­ti­mates on fac­tory re­bound

Muscat Daily - - BUSINESS -

Bei­jing, China - China’s econ­omy main­tained its mo­men­tum last quar­ter, as global trade and do­mes­tic de­mand spurred a pickup at the na­tion’s fac­to­ries.

China’s gross do­mes­tic prod­uct (GDP) in­creased 6.9 per cent in the sec­ond quar­ter from a year ear­lier, com­pared with a 6.8 per cent me­dian es­ti­mate in a Bloomberg sur­vey, match­ing the pace of ex­pan­sion in the first quar­ter. In­dus­trial out­put rose 7.6 per cent in June from a year ear­lier, com­pared with an es­ti­mated 6.5 per cent in­crease.

The ex­pan­sion high­lights the re­silience of China’s econ­omy, as ac­tiv­ity has re­mained ro­bust even as pol­icy mak­ers have tried to curb ex­ces­sive and spec­u­la­tive borrowing, lead­ing to a slow­down in money sup­ply growth.

Syn­chro­nised growth in most de­vel­oped mar­kets has meant that ex­ports have helped to keep the ex­pan­sion on track, and the ef­fects of a cool­ing prop­erty mar­ket are yet to kick in.

The sta­tis­tics bu­reau said the re­sult ‘pro­vides a solid ba­sis’ for meet­ing the full year growth tar- get of 6.5 per cent or above.

“The im­me­di­ate driver is much stronger in­dus­trial pro­duc­tion, which is be­ing lifted by many fac­tors: Re­cov­er­ing ex­ports, very low in­ven­tory, ro­bust re­tail sales and in­vest­ment-led de­mand,” said Gene Ma, chief China econ­o­mist at the In­sti­tute of In­ter­na­tional Fi­nance in Wash­ing­ton.

The coun­try’s fixed-as­set in­vest­ment climbed 8.6 per cent in the first half of this year, while re­tail sales jumped 11 per cent from a year ear­lier in June, com­pared with a me­dian es­ti­mate of 10.6 per cent in a Bloomberg sur­vey

“It shows that Bei­jing’s fi­nan­cial delever­ag­ing was well-timed and care­fully tar­geted not to have much spillover on the real econ­omy,” said Rob Sub­bara­man, chief econ­o­mist for Asia ex-Ja­pan at No­mura Hold­ings Inc in Sin­ga­pore.

“Fis­cal stim­u­lus re­mains an im­por­tant driver of growth. It’s also en­cour­ag­ing to see more signs of re­bal­anc­ing with the pickup in re­tail sales growth,” Sub­bara­man added.

In the sec­ond quar­ter, China’s out­put ex­panded 1.7 per cent from the first three months. Crude steel pro­duc­tion ex­panded to an all-time high last month.

Con­sump­tion con­trib­uted 63.4 per cent to GDP growth in the first half and ser­vices ac­counted for 54.1 per cent of GDP value in the first half.

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