Flood of stimulus underpins Chinese growth in second quarter

Jessica Morris
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Analysts were still pessimistic about future growth prospects (Source: Getty)

Easy monetary policy helped the Chinese economy expand slightly faster than expected in the second quarter, data published today showed.

Official data suggested gross domestic product grew 6.7 per cent between April and June from a year-ago, unchanged from the first quarter, and slightly ahead of market expectations of a dip to 6.6 per cent.

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The National Bureau of Statistics also reported industrial output swelled 6.2 per cent year-on-year in June, compared to six per cent in May. Retail sales rose to 10.6 per cent during this period, up from 10 per cent growth.

But fixed asset investment growth in the first half slowed to nine percent, from 9.6 per cent in the first five months of the year.

Analysts said the better-than-expected figure was likely to be a blip, as they delivered a pessimistic outlook for the world's second largest economy's future growth prospects.

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"While there was a big pick-up in retail sales, the slowdown in fixed-asset investment is a worry. Given the slide in fixed-asset investment growth, I'm inclined to keep my forecast of slowing growth over the course of the year," said Tim Condon, chief economist for Asia at ING in Singapore.

Nomura economist Wendy Chen added: "We think GDP growth is likely to slow in the third quarter and may rebound in the fourth quarter driven by post-flood reconstruction activity. But the rebound will not last."

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