China’s strong GDP growth paves way for deeper reforms
BEIJING (Reuters) – China’s economy expanded fasterthan-expected in the second quarter, setting the country on course to comfortably meet its 2017 growth target and giving policymakers room to tackle big economic challenges ahead of key leadership changes later this year.
The boost to growth was in part driven by firmer exports and production, in particular steel, which could heighten trade tensions as the US and China begin economic talks this week. US President Donald Trump has made the US trade deficit with China a top agenda item in bilateral talks and has also flagged the steel trade as a point of contention.
China’s gross domestic product rose 6.9 percent in the second quarter from a year earlier, the same rate as the first quarter, the National Bureau of Statistics said on Monday. That was higher than analysts’ expectations of a 6.8 percent expansion.
Economic data from the second quarter has prompted a number of analysts to upgrade their GDP forecasts for China for 2017, although some moderation in growth is expected later this year as policymakers’ efforts to rein in property and debt risks weigh on activity.
“In general, we expect GDP growth to remain robust in the second half but slower than the first half, due to the high base,” Citi economists said in a research note. “Looking ahead, uncertainty remains on investment and trade.”
The bank has raised its 2017 annual GDP projection to 6.8 percent on-year from 6.6 percent previously.
The robust numbers kept world shares near a record high and briefly helped China's major stock indexes recoup earlier losses.
The second quarter numbers put the economy on a strong footing to meet China’s growth target of around 6.5 percent in 2017, which would give policymakers room to defuse financial risks.