The big takeaway from the Chinese second quarter GDP and the monthly economic data for June is that Chinese growth remains hooked up to the stimulus pouring into the economy in the first quarter and subsequent revival in property.
GDP grew an annual 6.7% in the quarter, unchanged from the first quarter, but above forecasts for growth of 6.6%. The GDP figure belied weak data in May especially and spotty monthly figures for June. GDP rose 1.5% quarter on quarter from the three months to March. Government investment in fixed assets rose 23.5% in the first six months, while growth in private investment slowed to 2.8% – showing the influence of the surge of government spending in first half stimulus,according to Friday’s data.
The National Bureau of Statistics also said that industrial output rose 6.2% in June from a year earlier, up from the 6.0% growth in May, while fixed-asset investment climbed 9.0% year on year for the six months to June period, compared with an increase of 9.6% in the year’s first five months.
Retail sales grew 10.6% in June from a year earlier, accelerating from a 10% increase in May. The industrial-production and retail figures were better than forecast while the investment figure was below expectation.
China’s Finance Ministry reported on Friday that government spending rose 19.9% year-over-year in June compared with a 17.6% increase in May- so the stimulus spending is still bubbling through the economy.
On the negative side of the ledger, the rebound in China’s property market lost ground in June, with smaller gains in housing sales in June holding back investment growth.
Housing sales rose 44.4% in the first half of the year to 4.18 trillion yuan ($US625 billion), against a 53.4% in the five months to May.
In June, housing sales rose 21.8% on-year by value, slower than the 32.9% rise recorded in May, figures from Western economists showed.
Investment growth in China’s real-estate development rose 6.1% to 4.66 trillion yuan in the six months to June, down from the 7.0% gain recorded in the first five months this year.
In June though, property investment was up only 3.5% from a year ago, compared with 6.6% in May, according to Reuters’ calculations.
Construction starts across residential and commercial real estate rose 14.9% on-year to 755.4 million square meters, slowing from the 18.3% gain recorded in the first five months of this year. Looking at some of the June data, mining barely grew – up just 0.1% per cent in the first half, while electricity, heat and water output rose 2.6%.
China’s crude steel output rose 1.7% to 69.47 million tonnes in June from a year ago, the National Bureau of Statistics said on Friday. Total production in the first half of this year fell 1.1% to 399.56 million tonnes from the same period last year.
And the same report showed Chinese domestic coal production fell 9.7% in the six months to June. That was after a 2% drop in 2015.
