China Q2 GDP suggests momentum to carry to Q3

THE Chinese economy grew by 1.7 per cent quarter on quarter in the second quarter, in line with our forecast, but slightly ahead of market expectations.

The year on year growth stays flat at 7 per cent (versus our forecast of 6.8 per cent), partly because of an upward revision to first quarter growth.

More importantly, all the monthly activity numbers surprised on the upside, with accelerating growth in retail sales (10.6 per cent versus 10.1 per cent in May) and industrial production (6.8 per cent versus 6.1 per cent), and a flat reading for fixed asset investment (11.4 per cent versus 11.2 per cent market forecast).