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China growth steadies on lending, consumer spending
[BEIJING] China's growth stabilized as lending and consumer spending picked up, suggesting the economy is responding to stepped up policy support.
Gross domestic product rose 6.7 per cent in the second quarter from a year earlier, compared with 6.6 percent seen by economists Bloomberg surveyed and in line with the government's growth target of at least 6.5 percent for the full year.
Industrial output and retail data for June beat estimates, investment slowed, and a report from the central bank showed the broadest measure of new credit beat all 29 analyst forecasts.
A credit surge and housing recovery this year have propped up growth, while raising questions about the sustainability of the debt-fueled expansion.
Friday's data blast suggests the People's Bank of China doesn't need to boost support for the world's second-largest economy after holding the benchmark interest rate at a record low since October and cutting the required-reserve ratio for big banks in February.
"The Chinese economy remains stable," Larry Hu, head of China economics at Macquarie Securities Ltd in Hong Kong, wrote in a note. "It makes no sense to ease policy at this moment, given the current growth momentum." Bloomberg's monthly GDP tracker increased for a second month, indicating a 7.13 per cent pace of expansion in June.
Nomura Holdings Inc raised its full-year growth estimate to 6.5 per cent from 6 per cent, citing the stronger-than-expected second quarter. Chief China economist Zhao Yang also reduced his forecast for the number of reserve-ratio cuts this year to two from three while maintaining his estimate the PBOC will lower the main rate by 25 basis points.
The Shanghai Composite Index closed near a three-month high and posted a third straight weekly advance. The yuan advanced.
Consumption contributed 73.4 per cent to economic growth in the first half, up from about 60 per cent a year earlier, the statistics authority said.
"Consumer spending has proven more resilient," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. "China is also weathering the external drag better than feared, with generous stimulus oiling the wheels of the domestic economy."
Factory Output June readings show the economy gained momentum as the quarter went on.