China's economy grew 6.9% in second quarter

China's economy grew 6.9% in second quarter

Therefore, the second-quarter upturn could be a boon for the country's leaders as they seek to contain a risky build-up in debt that has ballooned to 277 percent of gross domestic product (GDP).

The government is aiming for growth of about 6.5 per cent in 2017, slightly lower than last year's actual 6.7 per cent, which was the weakest pace in 26 years.

"Everything shows that the economy is recovering and growing compared with previous 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.

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.

"This time a year ago, things were a bit dicey with concerns about a growth slowdown and pressure on capital outflows and the currency, but as we expected in the lead-up to party congress, stability has reigned".

Mainland markets traded in negative territory for the first half of the day, with the Shanghai Composite down nearly 2.5 percent at one point and the Shenzhen Composite down more than 3 percent.

Data from NBS showed that industrial output climbed 7.6% annually, faster then the 6.5% increase logged in the prior period.

First, planned new investments have lost steam entering the year of 2017, suggesting that fiscal spending has been gradually fading.

Its forecast for China GDP growth this year is 6.5 percent, with upside risk due to strong growth and exports.

While the economy steams along, the government is setting a wary tone: The front page commentary in the People's Daily, said China should not only be alert to "black swan" risks that catch people off guard but also more obvious threats. Observers fear that surging debt could trigger a banking crisis or further slow the economy.

"It is therefore highly probable that authorities will continue to use the resources and policy tools at their disposal to ensure a positive economic outcome", Citibank analysts said over the weekend.

In the latest alert, Fitch Ratings on Friday said China's growing debt could trigger "economic and financial shocks" even as it maintained its A-plus rating on the country.

In the second quarter, GDP of the world's second largest economy held steady at 6.9 per cent year on year, flat from the first quarter.