China’s Second Quarter Growth Beats Expectations At 6.9%, Says Capital Taiyo Trading

TOKYO--()--Capital Taiyo Trading has noted that between April and June, China’s economy grew at an annual rate of 6.9%, which is slightly higher than the forecast, which expected a growth of 6.8%.

The figure was the tenth Gross Domestic Product (GDP) report where the year-on-year growth rate was either exactly in line with the expectations or exceeded it, like in this latest report.

China’s economy shows an incredible stability compared to other economies, and even the housing bubble and Beijing debt did not slow this down. The economy grew by 1.7%, which is higher than the 1.3% increase reported in the March quarter, yet still in line with expectations.

The NBS also reported that industrial output grew 7.6% compared to last June, equaling the fastest rate of growth reported since December 2014.

The growth of the Chinese economy is powered by many familiar sectors: construction of apartment buildings, strong retail sales (especially online), rising government deficit spending on infrastructure, including new highways and high-speed trails.

President Xi Jinping has a clear vision: he wants to link the economies of Asia, the Middle East, and much of Europe and eastern Africa to the Chinese economy with the ‘One Belt, One Road’ plan.

What keeps the growth rate of the Chinese economy so stable? Studies done by analysts over the years have found that China’s national statisticians usually appear to overstate growth during periods of economic lows and understate growth when the economy is peaking.

A series of recent scandals in a number of large Chinese economic epicenters, particularly in the northeast, have indicated that local officials may overreport economic activity to Beijing, so it is fair to question these numbers of economic growth.

China has been making efforts to slow down the housing market, and at this point, analysts are suspecting that the tighter lending rules may not have the cooling effect that many expected.

"Property prices will have an impact in the second half year, but the impact might not be as big as we thought. It is only on prime cities. The third-tier and fourth-tier cities might catch up a little bit and that will offset some of the slowdown in first tier cities," said Mitsue Ippei, Head of Research & Analysis at Capital Taiyo Trading.

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Mr. Mitsue Ippei, +81-3-4520-8072
mitsue.ippei@cttpartners.com

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