China’s economy expanded by 7.5 per cent in the second quarter, accelerating slightly from the first quarter and improving the government’s chances of realising its target of 7.5 per cent growth for the full year.
The figure, which exceeded consensus estimates of 7.4 per cent, show that the government’s “mini-stimulus” measures have gained some purchase.
China’s leadership had said it was willing to tolerate slower rates of growth to achieve structural reform, but seems to have blinked when the economy grew by the slowest rate in 18 months in the first quarter, at 7.4 per cent.
Economists have warned that supporting short-term growth could come at the expense of continuing China’s reliance on state-backed investment and adding to its worrying debt load.
“The major driver is Beijing’s stimulus measures focusing on increasing spending on railway and social housing with its own money. The negative impact of the stimulus on the financial system is thus relatively small,” said Lu Ting, an economist at Bank of America Merrill Lynch.
Other data also pointed to stabilising growth. Industrial production, a key driver of China’s economy, rose by 9.2 per cent in June, the strongest pace since December, the National Bureau of Statistics said.
