China’s economic growth accelerated in the three months to June, with quarter on quarter growth rising by 2%, up from the 1.4% seen in the March quarter.
That took the annual growth to 7.5%, bang on the official target and up slightly from the 7.4% seen in the first quarter.
A small rise in industrial production, solid bank lending figures and OK results for urban investment and retail sales helped as the economy responded to a series of small, target spending boosts in housing and infrastructure from March-May onwards.
China GDP bang on target
Industrial production rose at an annual rate of 9.2% in June, up from 8.7% in May (the lowest for five years), and hit a high for 2014 so far. Production for the first half of this year was up 8.8%.
But annual growth in retail sales slowed to 12.4% from 12.5% in May.
Urban fixed-asset investment (watched as a measure of construction activity) was up 17.3% for the January-June period, down on the 17.6% rate seen in the first quarter in in 2013.
The big negative was the 9.2% fall in house sales for the first six months of the year. House sales have been falling for all of the first six months of 2014.
Investment in real estate development (roughly 20% of all investment in China) rose by 14.1% in the first half of the year, down from the near 20% rate in 2013.
That too is a continuing concern for western analysts, who fear it could trigger a downturn in debt problems in Chinese banks and so-called shadow financiers.
That figure caused Asian markets and the value of the Aussie dollar to dip during trading yesterday.
The People’s Bank of China released figures on Tuesday which showed bank lending jumped in June from a year earlier and a category called total social financing, which includes many forms of so-called shadow banking, increased even faster.
As well there was a big rise in lending by the government for urban renewal which hit $US35 billion in the first half of the year from the China Development Bank. That amount is expected to be again lent in the December half year.
The AMP’s chief economist Dr Shane Oliver said in a note yesterday that yesterday’s data "confirmed that the growth slowdown seen earlier this year is over and suggests that mini-stimulus efforts are working.
"After slowing through 2010 into early 2012, Chinese annual GDP growth has since been stuck in a narrow 7.4% to 7.9% range with a similar message coming from manufacturing conditions PMIs (shown as a smoothed average of the official and PMI versions in the chart below.
Chinese growth is actually quite stable
Source: Bloomberg, AMP Capital
"Over the last few years China has had a hard landing scare once a year, but from the chart it’s hard to tell what all the fuss is about. It seems the latest fears regarding a hard landing will also come to nothing," Dr Oliver wrote.
