China’s 2Q economic growth steady at 7 percent

China has released figures of its economic growth for the second quarter showing the country’s economy has grown at a steady seven percent, its weakest performance since the global crisis but slightly better than expected. Citibank said recently that it believes China’s actual growth rate could be closer to 5%.

The Chinese economy has posted a 7-per cent growth in the second quarter compared to a year ago quarter, beating market predictions of a 6.8-per cent expansion and demonstrating that the world’s second-largest economy is on a stable path. They suggested the Chinese government would need to continue implementing a “proactive fiscal policy”, including further interest rate cuts, in the second half of the year, in order to hit its investment targets.

Suan Teck Kin, an economist at UOB, took the data at face value, raising his full-year growth forecast to 7.1 percent from 6.8 percent. Late last month, the People’s Bank of China (PBOC) cut interest rates and the reserve requirement ratio (RRR) for some lenders in a bigger-than-expected easing package.

Slowing growth in trade, investment and domestic demand has been compounded by a cooling property sector, deflationary pressure, and the recent equity market panic, so signs of improvement may help buttress faltering investor confidence in the effectiveness of Beijing’s management.

China’s total trade declined in the first half of this year, official data showed Monday, falling well short of the government’s targets.

The National Bureau of Statistics data showed that growth in the June quarter was 1.7 per cent, up from an upwardly revised 1.4 per cent in the previous quarter.

Retail sales quickened to 10.6 per cent, compared with expectations for a 10.2 per cent gain.

In light of the figures Nomura lifted its annual GDP forecast from 6.8 percent to 6.9 percent.

Retail investors have sent $3.4 billion to China-focused mutual funds and ETFs for the year to date, the largest amount since 2009, according to Lipper data.

It is not only the government reporting a warmer second quarter; the recent independent China Beige Book survey also reported signs of a broad-based recovery for the period, which it said was largely driven by growth in the interior provinces.

It is higher than the growth rate of the industrial sector, or the secondary industry, that expanded by 6.1 percent.