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China stock boom boosted GDP, raising sustainability questions
[BEIJING] China's frenzied stock market boom, which soured in the second half of June, helped drive a surge in financial sector growth that underpinned the economy's better- than-expected gross domestic product result.
Financial services surged 17.4 per cent in the first six months from a year earlier, according to China's statistics authority, as exchanges and brokerages registered surging revenue amid record trading volume. It was the stand out industry as real estate languished and agriculture grew at about half the overall economy's pace of 7 per cent.
The data underscores the fragility of China's growth in the quarter, as a rout that wiped almost US$4 trillion in equity values may shake confidence in the sector. That could dent hopes for a pick up in the economy in the second half.
"To the extent that growth was supported by financial sector gains from the stock market, it won't be sustained without further stimulus," Bloomberg economist Tom Orlik wrote in a note after the quarterly GDP release on Wednesday.
Exchanges, brokers and banks were the first to benefit from the spike in equity trading. The nation's brokers gained more profit in the first half of this year than all of 2014, according to statements on the Securities Association of China's website.
The sector also supported employment, as labor demand from finance rose 17.5 per cent in the three months ending June from a year earlier, according to the Ministry of Human Resources and Social Security. That compares to a deteriorating nationwide picture - the overall ratio of jobs available to job seekers dropped to 1.06 last quarter from 1.11 a year earlier.
Manufacturing rose 6 per cent from a year earlier in the first six months, while construction expanded 7 percent. The services sector expanded 8.4 per cent in the first half and accounts for 49.5 per cent of GDP.