The Chinese economy unexpectedly picked pace faster in the second quarter as industrial output grew and investment remained strong. The National Bureau of Statistics said the economy grew 6.9 per cent in the second quarter from a year earlier, the same rate as the first quarter. Analysts had said they expected the economy to expand 6.8 per cent in the April-June quarter, but were proven wrong as exports recovered and property construction boomed.
“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 build-up of structural imbalances remain,” NBS said in a statement. The Chinese government is aiming for a growth of around 6.5 per cent in 2017, a little lower than last year's 6.7 per cent, their weakest pace in 26 years. China's factory output grew 7.6 per cent in June from a year earlier, while fixed-asset investment expanded 8.6 per cent in the first six months of the year. 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.
Last week, data showed both China's exports and imports rose faster-than-expected in June from a year earlier, which could offset weakness in other parts of economy in the second quarter. The People's Bank of China shifted to a modest tightening bias at the start of this year, guiding market interest rates higher during the first quarter, including immediately after the US Federal Reserve raised rates in March. But the central bank injected substantial liquidity last month to help avoid an end-quarter cash crunch as Beijing tightened regulations to force banks to deleverage.
