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China’s gross domestic product (GDP) for the second quarter continued its pace in the first quarter as industrial output and strong consumption lifted the country’s factories.

The National Bureau of Statistics (NBS) said on Monday that China’s economy rose 6.9 percent from earlier year, the same rate as the first quarter driven by robust investment in infrastructure projects.   

Analysts expected a 6.8 percent growth in the April to June quarter while Beijing’s expansion target was around 6.5 percent for 2017, a little lower than the 6.7 percent the previous year which was the country’s lowest rate in 26 years.

On a quarterly basis, GDP added 1.7 percent from 1.3 percent in the first quarter matching estimates.

Industrial output gained 7.6 percent in June prior year beating analysts’ expectation of a 6.5 percent increase.

China’s fixed-asset investment from January to June was also up 8.6 percent in the first half of the year compared to average forecast of 8.5 percent.  

Retail sales rose 11 percent in June a year earlier, higher than analysts’ estimate of 10.6 percent.

The growth only proves the strength of China’s economy despite policy makers’ efforts to limit extreme and risky borrowing which causes a sluggish advancement in money supply.

At the National Financial Work Conference, President Xi Jinping clarified that regulatory tightening would continue quickly with a Commission for Financial Stability established. Debt reduction will also be an important factor in monetary policy  

So far, this monetary tightening has not affected actual progress with private investment picking up led by New Economy parts of China which is showing great development in the tech side translating into strong growth.

Impending Slowdown

Despite China’s better than expected GDP results, analysts expect the country’s economy to slow down later in the year saying that the effect of the recent stimulus procedures will start to fade away as Beijing looks for a solution to ease a red-hot housing market and tries to control leverage.

Economist Zhou Hao thinks so too saying that even though the country was better than expected in the first half of the year, a slowdown was likely to happen.

Julian Evans-Pritchard of Capital Economics said that the recent crackdown on financial risks has decelerated credit development which may cause trouble on the economy during the second half of this year.

Stability Plan

President Xi Jinping is expected to hold on to power at the party congress, giving him more control during what analysts called are a long overdue but dire reforms like restructuring huge state firm debt.

Xi also said that he would like to provide China’s central bank a bigger role in handling threats in the financial system but analysts say that the People’s Bank of China (PBOC) is likely to stay still for now.

Economist Craig James said that based on the data, easing and tightening are really not necessary since inflationary pressures are very much contained therefore PBOC should just remain to be observant.

NBS’ spokesman Xing Zhihong also suggested further growth in rebalancing the economy this year saying upbeat changes in the economy will rise, with the trend of stable and improving growth strengthening and expanding even more.

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