China Reports 6.9% Q2 GDP Growth, Stocks Fall On Regulation Concerns

Chinese economy steady amidst slowdown worries

The figure beat analyst expectations, and sets China on the path to post its first year-on-year acceleration of growth since 2010. Studies over the years have found that China's national statisticians appear to overstate growth during periods of economic weakness and understate growth when the economy is booming. Yesterday's China GDP report came in at 6.9% as expected.

Robust overseas shipments-reflecting renewed strength in the global economy-and solid consumption at home helped offset a slowdown in investment.

The government is targeting for a growth of around 6.5% in 2017, slightly lower than last year's actual 6.7%, which was the weakest pace in 26 years.

Industrial output gained 7.6 percent in June prior year beating analysts' expectation of a 6.5 percent increase.

During January to June, fixed asset investment increased 8.6%, the same pace as seen in January to May period.

"The economy may continue to fluctuate a little bit, but there would not be sharp declines, and China does not face any risk of a hard landing", said Yu of CASS, who also is former member of the monetary policy committee of the People's Bank of China, the central bank.

The bureau also said that retail sales jumped an annual 11.0 percent in June, beating forecasts for 10.6 percent and up from 10.7 percent in May.

China's ruling Communist Party has focused on keeping the economy stable ahead of a reshuffle of its top leadership in the fall, when President Xi Jinping will start his second term.

Trade data released earlier showed export growth accelerated in May and June, at least temporarily averting concern about possible politically unsafe job losses in trade-related industries that employ millions of people.

Confidence in the robustness of the recovery was not universal, however. But the economy is "still relying quite a lot on investment and credit and overall financial leverage is still building up".

On a quarter-on-quarter basis, the GDP rose 1.7 percent in the second quarter. Chinese exports rose only 9.1 percent in the second quarter.

However, instead of being bolstered by the encouraging signs of growth, China's stock markets remained rattled and bemused by the piece of good fortune.

Chinese imports from the USA have also risen, but most of the extra purchases have been oil and other raw materials, which create many fewer jobs than manufacturing.

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