ANNOUNCEMENT: Expert Investor is now PA Europe. Read more.

China GDP growth surprises on the upside

China pulled out better than anticipated growth over the second quarter, leading analysts to speculate it could have greater momentum moving forward.

During the second quarter of 2017, the Chinese economy grew by 6.9% year-on-year to about 38.2trn yuan ($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.

The 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.

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.

Still, the fact that China’s Q2 GDP data was stronger than expected “suggests that the economy is maintaining momentum,” said Investec Wealth & Investment bond strategist Shilen Shah. 

“Despite concerns over China’s so-called shadow banking system, the global economic recovery seems to have supported Q2 GDP,” Shah reflected.

Although “retail sales were somewhat stronger,” he noted that the “underlying data suggests that external demand and capex remain the key drivers of growth”.

MORE ARTICLES ON

MORE IN

  • Can M&A and buybacks breathe life into UK market?

    Can M&A and buybacks breathe life into UK market?

    Both buybacks and M&A should help realise value in UK shares, boosting prices and giving investors another reason to consider the UK stockmarket Not only does M&A activity appear to be picking up, with a high-profile bid for UK electronics retailer Currys, but the scale of company buybacks continues to accelerate. If it goes well,…

  • Capital Group launches multi-thematic Article 8 funds

    Capital Group launches multi-thematic Article 8 funds

    Capital Group has launched a set of multi-thematic sustainable funds that are available for investors in Europe, writes Christian Mayes. The Capital Group Sustainable Global Opportunities fund (LUX) will invest in global equities, while the Capital Group Sustainable Global Corporate Bond fund (LUX) will target fixed income exposure. The launch also includes a multi-asset offering…

  • Bond funds pull in €29.7bn in January – LSEG

    Bond funds pull in €29.7bn in January – LSEG

    Bond products were the best-selling asset class in January, according to LSEG Lipper’s European Fund Flow report, writes Christian Mayes. The asset class pulled in a net €29.7bn in the month, while Money Market USD grouping was the best-selling Lipper Classification after receiving €11.2bn inflows. Providers of mutual funds pulled in €22.5bn, while passives saw net…

  • Quarter of Article 8 funds at risk of greenwashing – MainStreet Partners

    Quarter of Article 8 funds at risk of greenwashing – MainStreet Partners

    A quarter of all Article 8 funds could be accused of greenwashing based on their sustainability framework and practices, according to MainStreet Partners, writes Christian Mayes The 24% of funds classified as a greenwashing risk by the 2024 ESG Barometer report marks a four percentage point increase from the 20% flagged at the end of…

  • EU green rules could stymie decarbonisation projects – ExxonMobil

    EU green rules could stymie decarbonisation projects – ExxonMobil

    The European Union’s climate regulations may lead to it halting its investments in Europe, ExxonMobil has warned. Speaking to the Financial Times, Karen McKee, president of the product solutions division, said the oil and gas giant had struggled to begin decarbonisation projects in Europe due to the regulatory burden. The result, she added, was that…

  • ICE flags need for Europe to double green investment

    ICE flags need for Europe to double green investment

    Investments to modernise energy and transport must double by the end of the decade to reach 2030 climate targets, the EU has been warned. According to the Institute for Climate Economics (ICE), which has released the European Climate Investment Deficit report, the bloc lacks what it calls a “consistent tool” to ensure monitoring of the…