China’s GDP expanded 7.0 per cent year-on-year in the second quarter, official data showed Wednesday, beating expectations as months of central bank policy stimulus helped put a floor under the world’s second-largest economy.
The statistics bureau described the nascent recovery as “hard won” and noted it was driven primarily by an increase in domestic consumption, which produced 60 percent of China’s economic growth in the first half, compared with 35.7 percent for capital formation and 4.3 percent from net exports. The International Monetary Fund in a recent released report had cut global growth forecasts and said that the slowdown in China was apparent and was hurting the growth of the global economy at the current moment which was seen as a negative.
The GDP figures announced by the NBS also remained unchanged from the first three months of the year, which was the lowest since 2009 when it fell to 6.6 per cent.
“Despite a stronger than expected underlying economy and the recent correction in the domestic equity market, we retain a substantial, long standing underweight position in China“, Ballard said.
According to Lian, the cuts in the money banks reserve and interest rates are already taking effect, further revealing that more obvious effects will be felt in the second half of the year.
“China is seeing its slowest rate of economic growth since the financial crisis, along with rapidly declining commodity prices, falling export trade and a dramatic deterioration in nominal activity”, he said. Fixed asset investment for the first half of the year advanced 11.4%.
Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong, said real activity growth excluding the extraordinary financial transactions likely decelerated to 6.2 percent in the second quarter from a year earlier, down from 6.5 percent in the first quarter.
Second-quarter GDP grew 1.7 per cent over the previous quarter, NBS data showed.
Wednesday’s data showed fiscal expenditure rose 13.9 percent on an annual basis in June, a sharp rise from May’s 2.6 percent but well below April’s 33.2 percent spike.
In order to stabilise the economy, policymakers have introduced a number of measures.
The other, however, was that investor confidence in China was severely shaken.
The GDP data come dramatic fall on the Chinese Stock markets since mid June, dropping about 30 percent.
Clouding the outlook is the stock market rout that triggered an all-guns-blazing policy response.
Stuart Allsopp, head of Financial Market Strategy in BMI Research, said: “The key risk facing the Chinese economy stems from the potential for stock market weakness to undermine investment plans”.
The growth rate beat a median market forecast of 6.9% for the Q-2, as authorities cited “positive signs” in the economy. Chinese stock markets did not celebrate the growth figures, with benchmark indexes down more than two per cent.
At Daiwa, analysts Kevin Lai and Junjie Tang said the data set just doesn’t mean much anymore.
Sheng said a healthy stock market was vital to economic development and that Beijing was confident of preventing systemic risks.
Beijing, July 16 (IANS) China knows that “a proper slowdown in economic growth is necessary for economic restructuring”, a state-run Chinese daily said Thursday, noting that efforts to deepen reforms were making progress.