Chinese growth picks up but few expect the momentum to last

Nigeria’s Finance Minister Kemi Adeosun

The Chinese economy is on target to achieve annual growth for the first time since 2010, with figures showing that GDP grew by 6.9 per cent in the first half of 2017.

But China's speedy growth - an uptick from the 6.7% it recorded a year ago - will be hard to sustain in the months to come, analysts say, as the government focuses on reining in the country's rapidly ballooning debt.

For the quarter, China's National Bureau of Statistics (NBS) said the economy grew by 1.7% in seasonally adjusted terms, in line with expectations but higher than the 1.3% increase reported in the March quarter.

"However, we must be aware that there are still many unstable and uncertain factors overseas and long-term structural contradictions remain prominent at home".

"It shows that Beijing's financial deleveraging was well-timed and carefully targeted not to have much spillover on the real economy", said Rob Subbaraman, chief economist for Asia ex-Japan at Nomura Holdings Inc.in Singapore.

On a quarter-on-quarter basis, the GDP rose 1.7 percent in the second 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.

The Chinese government previously stated that it is aiming for a minimum growth rate of 6.5% this year, a result that looks more than achievable given the strength seen in the first half of the year.

The higher throughput came after another month of strong crude oil imports and as top refineries prepared to cut output in the third quarter.

Factory output also picked up in the second quarter, though the 6.9 percent growth for the first half was only a slight pickup from recent quarters.

"Growth overall was very robust", said Iris Pang, an economist at ING Bank NV in Hong Kong.

Fixed-asset investment in non-rural areas increased 8.6% in the first half of the year.

In the first six months, however, growth in retail sales of consumer goods expanded to 10.4 percent from the same period previous year, or compared with 10 percent in the first quarter of 2017. In May, Moody's Investors Service downgraded China's credit rating for the first time in almost three decades, saying it believes the rapid build-up of debt is eroding the country's financial strength.

June's total surpassed April's monthly record of 72.78 million tonnes, fuelling worries of a growing glut.

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