China GDP Growth Tops Expectations

(RTTNews) - China's economy registered a faster-than-expected growth in the second quarter with strong support from exports and industrial production despite the US trade tariff threats but weaker investment and persistent deflation continued to pose challenges. Gross domestic product expanded 5.2 percent on a yearly basis after rising 5.4 percent in the previous quarter, the National Bureau of Statistics said. Nonetheless, the growth was above economists' forecast of 5.0 percent.

For the first half of the year, GDP expanded 5.3 percent from the same period last year, signaling that the economy remains on track to achieve its full year growth target of around 5 percent.

Data showed that industrial production jumped 6.8 percent in June, faster than the 5.8 percent increase in May. The growth rate was expected to ease to 5.6 percent.

Retail sales grew at a slower pace of 4.8 percent year-on-year after advancing 6.4 percent in the previous month. Moreover, this was weaker than forecast of 5.2 percent.

Fixed asset investment data disappointed again as geopolitical tensions and trade policies weighed on private investment.

In the first half of the year, fixed asset investment grew 2.8 percent, missing expectations for a 3.6 percent rise and also weaker than the 3.7 percent rise seen in the January to May period.

The decline in property investment worsened to 11.2 percent in the first half of the year from 10.7 percent in the January to May period.

The jobless rate remained unchanged at 5.0 percent in June as expected. June trade data showed that China's exports grew strongly by 5.8 percent due to the de-escalation of trade tensions with the US and a surge in shipments to ASEAN and EU economies.

ING economist Lynn Song said sharper-than-expected slowdowns in fixed asset investment, retail sales and falling property prices are a concern.

The second half of the year could prove to be more challenging as trade tariff uncertainty will remain an overhang with the next key deadlines coming up soon in August, the economist noted.

That said, the strength of the first half should keep China on track to achieve its full year target of around 5 percent growth, Song said.