China reports 6.9% second-quarter GDP growth on year, topping expectations

China reports 6.9% second-quarter GDP growth on year, topping expectations

China's economy grew 6.9 percent in the second quarter from a year earlier, buoyed by strong consumption and exports, despite tightening financial conditions, official data showed Monday.

China is targeting annual economic growth of around 6.5 percent this year, down from the 6.7 percent pace clocked in 2016 - the slowest in 26 years.

"Generally speaking, the national economy has maintained the momentum of steady and sound development in the first half of 2017, laying a solid foundation for achieving the annual target and better performance".

A survey by China's central bank in late June showed that 31.2 percent of households expect housing prices to rise in the third quarter of this year, while 46.1 percent of households tipped them to remain basically unchanged.

China eliminated around 120 million tonnes of low-end steel capacity in the first six months of this year.

As compared to China, India's GDP only grew by 6.1 percent in the first quarter, which is also less than the preceding year's projection of 7 percent.

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What that translates to is tighter control over the financial system and the economy, which could pose further strains as China's economy transitions to new sources of growth.

Retail sales also impressed, lifting by 11% from a year earlier. A report on how - or if - the USA will react could come as early as this week.

The services sector led the growth with an increase of 7.7 percent, while the manufacturing and the agriculture added 6.4 percent and 3.5 percent separately.

"What is important to note is that this is heavily driven by credit and fixed-asset investment", said Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen. In terms of de-stocking in the property market, the floor space of unsold homes were down 9.6 per cent at the end of June, state-run Xinhua news agency reported.

The ongoing economic transition and structural reform sparked optimism on China's future growth outlook. In May, Moody's Investors Service downgraded China's credit rating for the first time in almost three decades, saying it believes the rapid build-up of debt is eroding the country's financial strength.

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