During the second quarter of 2017, the Chinese economy grew by 6.9% year-on-year to about 38.2trn yuan (£4.3trn, $5.6trn), beating analysts’ prediction by 0.1%.
Though year-on-year growth was flat with the first quarter, the reading was comfortably above the government’s annual target of 6.5%, leading commentators to predict China could see its first annual acceleration since 2010.
Shilen Shah, bond strategist at Investec Wealth & Investment, said: “The better than consensus print for Chinese Q2 GDP suggests that the economy is maintaining momentum with both industrial output and fixed asset investment somewhat stronger than estimates.
“Despite concerns over China’s so called shadow banking system, the global economic recovery seems to have supported Q2 GDP,” he addeed.
“Retail sales were somewhat stronger; however, the underlying data suggests that external demand and capex remain the key drivers of growth.”
Retail sales shine
The latest update from the National Bureau of Statistics likewise pointed to higher retail sales growth of 10.4%, up from 10% in the first quarter, and a healthier stream of private sector investment, up 7.2% to 17trn yuan.
“Retail sales were somewhat stronger; however, the underlying data suggests that external demand and capex remain the key drivers of growth,” said Shah.
While fixed asset investment saw strong growth year-on-year of 8.6%, it was 0.6% lower from Q1.
However, instead of being bolstered by the encouraging signs of growth, China’s stock markets remained rattled and bemused by the piece of good fortune.
The Shanghai Composite Index, which had dipped by as much as 2.6% prior to the release of the Q2 GDP figures, fell sharply shortly after Asia’s markets opened on Monday.
By the late afternoon, however, it had recovered somewhat and was just 1.43% below the previous close at 3,176.5.
