China second-quarter GDP growth likely to cool

GDP for the second quarter was up 6.9% year-on-year with growth in the second quarter coming in at 1.7%. Factory output and retail sales clocked 7.6 and 11 per cent growth respectively.

The 6.9 per cent expansion for the second quarter of the year, announced by Beijing yesterday, matched growth in the first quarter.

Julian Evans-Pritchard, an economist at Capital Economics, said: "China's strong first half to the year won't last".

China's booming property market has been a solid support for economic growth for the past year, but it came at the cost of soaring housing prices that have triggered fears of a market collapse and the breakout of systemic financial risk.

Trump has accused China of "dumping" steel into the US market and his Commerce Secretary, Wilbur Ross, has promised "bold action" that could come in "the context of national security". China prefers a steady pace, at least in its officially reported data.

The country's gross domestic product grew 6.9% in the second quarter, according to government data released Monday, the same figure as the previous quarter and marginally higher than most forecasts.

China's real estate investment growth slowed slightly in the second quarter from the first, suggesting government curbs to rein in the red-hot property market are starting to hit speculators even though underlying demand remains resilient. Fitch Ratings on Friday maintained its A-plus rating for the country for China but said its growing debt could trigger "economic and financial shocks".

While growth in the high-flying property sector has cooled this year, a rebound in exports after several years of decline has helped prevent any broader slowdown in China's economy.

Fixed-asset investment growth slowed to 8.6 percent in the first half from the first quarter's 9.2 percent.

"Consumption demand is the most important engine of our economic growth, reflecting consumption's fundamental role in economic growth", Xing said.

Markets were rattled following a weekend meeting in which President Xi Jinping oversaw the setup of a new committee which will focus on credit risk and financial stability in the Chinese economy.

Economist Craig James said that based on the data, easing and tightening are really not necessary since inflationary pressures are very much contained therefore PBOC should just remain to be observant.

According to NBS, the service sector expanded 7.7 per cent year-on-year in the first half, outpacing a 3.5-per cent increase in primary industry and 6.4 per cent in secondary industry.

Vanessa Coleman

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