China’s economic growth accelerates

BEIJING: China’s economy grew faster than expected in the second quarter as industrial output and consumption picked up and investment remained strong, though analysts expect slower growth over the rest of the year as policymakers seek to reduce financial risk.

The economy grew 6.9 per cent in the second quarter from a year earlier, the same rate as the first quarter, the National Bureau of Statistics said on Monday. Analysts polled by Reuters had expected the economy to expand 6.8 per cent in the AprilJune quarter.

On a quarterly basis, growth picked up to 1.7 per cent from 1.3 per cent in the first quarter, in line with expectations.

Strength in retail sale and industrial output data helped offset a weak start for China stocks, which may have been linked to talk of tighter regulations.

Growth in China’s economy this year has beaten expectations as exports recover and property construction remains strong, though many analysts expect the world’s second-largest economy to lose steam later in the year as policy measures to rein in redhot housing prices and a rapid build-up in debt take a greater toll on growth.

“Overall, the economy continued to show steady progress in the first half...but international instability and uncertainties are still relatively large, and the domestic long-term buildup of structural imbalances remains,” the statistics bureau said in a statement with the data.

The government is aiming for growth of around 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.

China’s factory output grew 7.6 per cent in June from a year earlier, the fastest pace in three months, while fixed-asset investment expanded 8.6 per cent in the first six months of the year, both beating forecasts. Retail sales rose 11 per cent in June from a year earlier, the fastest pace since December 2015 and beating analysts’ expectations for a 10.6 per cent rise.

An upturn in global demand for Chinese products could be a boon for the country’s leaders as they seek to contain a dangerous build-up in debt that has ballooned to 277 per cent of GDP.

“(The new data) is encouraging for global growth as well because China is the second largest economy on the planet,” said Craig James, chief economist at Commonwealth Securities.