China's economy expanded faster than expected in the second quarter, setting the country on course to comfortably meet its 2017 growth target and giving policymakers room to tackle big economic challenges ahead of key leadership changes later this year.
The boost to growth was in part driven by firmer exports and production, in particular steel, which could heighten trade tensions as the United States and China start economic talks this week. US President Donald Trump has made the US trade deficit with China a top agenda item in bilateral talks and has also flagged the steel trade as a point of contention.
The economy grew 6.9 percent in the second quarter from a year earlier, the same rate as the first quarter, the National Bureau of Statistics said yesterday. Analysts polled by Reuters had expected the economy to expand 6.8 percent in the April to June period. On a quarterly basis, growth picked up to 1.7 percent from 1.3 percent in the first quarter, in line with expectations.
Strength in retail sales and industrial output helped offset a weak start for China stocks, which may have been linked to talk of tighter financial regulations.
Retail sales rose 11 percent in June from a year ago, better than expectations. Industrial output increased by 7.6 percent from a year earlier.
China's economic growth this year has beaten expectations as exports recover and construction remains strong, but many analysts expect the economy to weaken later in the year.
"Overall, the economy continued to show steady progress in the first half . . . but international instability and uncertainties are still relatively large, and the domestic long-term buildup of structural imbalances remains," the statistics bureau said.