China posts 6.9 percent GDP growth in H1

China posts 6.9 percent GDP growth in H1

Last year, China’s economy grew by 6.7 percent, which outpaced many nations but marked the country’s slowest growth in more than a quarter of a century.

Last week’s data showed that China’s exports, as well as imports in June, grew more than expected from a year before, which may offset sluggishness in other parts of the economy in the second quarter of this year. Therefore, the second-quarter upturn could be a boon for the country’s leaders as they seek to contain a risky build-up in debt that has ballooned to 277 percent of gross domestic product (GDP).

The 6.9 per cent expansion for the second quarter of the year, announced by China today, matched first-quarter growth.

Likewise, retail sales growth accelerated to 11% in June from 10.7% in May, while growth was expected to ease to 10.6%.

The pace was slightly higher than previous market consensus of 6.8 percent and well above the government’s annual target of “around 6.5 percent”.

Data from NBS showed that industrial output climbed 7.6% annually, faster then the 6.5% increase logged in the prior period.

And growth in both imports and exports also came in above expectations. The retreat of USA 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.

Analysts said investors were cautious after Chinese President Xi Jinping stressed the need to control financial risks at a five-yearly financial conference over the weekend. It also said that leverage of enterprises “was brought down”. Credit risks will increase. However, for China to upgrade its monetary and financial systems, there are some gaps the NFWC has left out. These issues are crucial to reduce local governments’ indebtedness.

Chinese shares were down despite the positive GDP report, with the benchmark Shanghai Composite index falling 2.5% during early trading on 17 July.