China’s economy grew by more than forecast in the first six months


BEIJING — China’s economy surged 6.9 percent in the first half of the year, fueled by consumer spending and trade, the country’s National Bureau of Statistics said Monday.

The economy grew by 6.9 percent in the second quarter, the same pace as in the first quarter. Analysts had predicted a slight cool-down in the second quarter, to growth of 6.8 percent.

The Chinese government has set an economic growth target this year of about 6.5 percent “or higher if possible,” the lowest economic growth target in 25 years.

“Everything shows that the economy is recovering and growing compared with last year,” Huang Weiping, an economics professor at Renmin University, told dpa.

Nevertheless, “it is a bit strange” that the growth exceeded many expectations, he said.

“I don’t understand how they can achieve such a good performance,” he added.

Economic growth has been boosted by government investment in infrastructure and poverty alleviation projects, as well as by entrepreneurship and the service industry, said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

Observers expect a drop in China’s economic growth in the second half of the year, but the government is trying to project stability ahead of an important Communist Party congress in a few months time.

China’s retail sales grew by 10.4 percent in the first half of the year, picking up pace versus the first quarter’s 10 percent growth, the statistics bureau also said. It attributed the growth to online sales, which surged 33.4 percent year-on-year in the first six months of 2017.

Factory output expanded 6.9 percent year-on-year in the first six months of the year, showing a slight increase of 0.1 percentage point over the first three months of the year.

Investment grew 8.6 percent year-on-year in the first six months, down 0.6 percentage point from the first quarter.

On Friday, customs data showed that China’s foreign trade accelerated in June, adding to generally strong trade data in the first half of the year.

The International Monetary Fund last month raised its forecast for China’s economic growth this year to 6.7 percent.

Risks loom, however, over the world’s second largest economy. Observers fear that surging debt could trigger a banking crisis or further slow the economy.

“The biggest risk is the credit and loan risk of enterprises,” Hu said. “The total debt ratio of Chinese enterprises has reached 156 percent of GDP, which might be the highest in the world. Therefore, the risks for banks are also very high.”

Moody’s credit rating agency in May cut China’s sovereign credit rating for the first time since 1989, citing the country’s worsening debt outlook.

At a national financial work conference on Saturday, Chinese President Xi Jinping called for stronger financial regulation to contain risks.

Last year, China’s economy grew by 6.7 percent, which outpaced many nations but marked the country’s slowest growth in more than a quarter of a century.