China’s GDP grew 6.9 per cent in the second quarter, above the government’s target for the year of 6.5 per cent, indicating that the world’s second largest economy would comfortably meet its 2017 growth target amid concerns over high debt levels. Xing Zhihong, spokesperson of China’s National Bureau of Statistics (NBS), said China’s economy is operating within a reasonable range, maintaining stable, coordinated and sustainable development.
In the second quarter, GDP of the world’s second largest economy held steady at 6.9 per cent year on year, flat from the first quarter. It is “laying a solid foundation for achieving the annual target,” he said.
The 6.9 per cent growth rate in the second quarter is faster than expected, prompting the financial consultancy agencies to revise China’s growth rate upwards. Nomura Securities said in a report after today’s data release that given the data, it is raising the forecast for the Q3 growth to 6.8 per cent from the previous 6.6 per cent, and the annual growth forecast to 6.8 per cent from 6.7 per cent.
The forecast of a gradual growth slowdown due to a weakening property sector and the possible moderation of domestic demand, as well as uncertainties over external demand remained valid, state-run Xinhua news agency quoted the report as saying.
Some 7.35 million new jobs were created in China’s urban regions from January to June, 180,000 more than the same period last year, while per capita disposable income grew 8.8 per cent, the data said. China aims to create more than 11 million jobs this year, 1 million more than last year’s target.
Xing also warned that there are still uncertainties and instabilities internationally, while domestic long-term structural contradictions remain prominent. Looking ahead, Xing said more positive changes are on the way and that the firming will be consolidated by improvement in the real economy and expansion of both external and domestic demand.
On a quarterly basis, the economy grew 1.7 per cent in the second quarter from the previous quarter. Industrial output expanded 6.9 per cent year on year in the first six months, against 6 percent in the same period last year. Retail sales of consumer goods grew 10.4 per cent year on year, up from 10 per cent for the first quarter.
Fixed-asset investment grew 8.6 per cent year on year in the first half, down 0.6 percentage points from the first quarter, while private sector investment was up 7.2 per cent to 17 trillion yuan, accounting for 60.7 percent of the total. Xing said the steady growth was the result of progresses in supply-side structural reform and new development concepts.
The data also showed China’s service sector continued its expansion as Chinese economy reconfigured its base from previously strong manufacturing to services. The service sector, already accounting for 54.1 per cent of the overall economy, expanded 7.7 percent year on year in the first half, outpacing a 3.5 percent increase in primary industries and 6.4 percent in secondary industries, according to NBS data.
Industrial capacity utilisation stood at 76.4 per cent in the first half, up 3.4 percentage points from a year ago. 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 news comes as the government focuses on reining in the country’s rapidly ballooning debt. In May, Moody’s Investors Service downgraded China’s credit rating for the first time in nearly three decades, saying it believes the rapid build-up of debt is eroding the country’s financial strength.