China's reported economic growth beat expectations in the second quarter despite revived fears of US trade sanctions.
Official figures said the economy grew at an annualised rate of 6.9% in the three-month period, exceeding estimates by ten basis points.
Shilen Shah, bond strategist at Investec Wealth & Investment, said “the economy is maintaining momentum with both industrial output and fixed asset investment somewhat stronger than estimates”.
“Despite concerns over China’s so-called shadow banking system, the global economic recovery seems to have supported second-quarter GDP. Retail sales were somewhat stronger; however, the underlying data suggests that external demand and capital expenditure remain the key drivers of growth.”
The figures appeared as press reports suggested US president Donald Trump was considering trade sanctions against China in retaliation for slow progress on his 100-day “action plan”, which ended on July 16.
Trump is reportedly disappointed that the US trade deficit with China has not significantly fallen and that North Korea has not been induced to give up its nuclear weapons.
“It was never realistic to expect to significantly reduce the US trade deficit with China as well as achieve concrete progress towards North Korean denuclearization in just 100 days,” said Andy Rothman, an economist at asset manager Matthews Asia. He added that, “this is a good time to remember that engagement with Beijing has been successful for both American and Chinese consumers”.
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