Jul 16, 11:49 PM EDT

China's economic growth held steady in the latest quarter, boosted by unusually strong trade, despite concerns of a slowdown in the world's second largest economy


AP Photo
AP Photo/Andy Wong

Multimedia
Video photo gallery on trash in China
China celebrates 60th year
Panorama of Tiananmen Square
Remembering Tiananmen
A year after China quake
Migrant laborers struggle to find work
Checking Beijing's Air
China's morning exercises in parks
Exploring Chinese Cuisine
Beijing Architecture Changes For Games
Woman Rescues Homeless Quake Dogs
China Holds Funeral for Panda
China's 1-child Policy Causes Extra Pain
Map of Earthquake Zone in Central China
Entrepreneurs Move Into, Out of China
Olypmics in Beijing Highlight China's Water Woes
Foreign Buyers Head to China Despite Problems
Coal Use Produces Pollution, Illness
Coal Means Profit, Woes for China
China Extending Its Reach Around the World
In China, the Desert Closes In
Latest News
Authorities say a massive explosion has hit a food shop in eastern China during the breakfast rush, killing two people and injuring 55, 12 of them seriously

The Trump administration blames Beijing's "intervention in its economy" for China's $347 billion trade surplus with the U.S., but economists say the gap stems largely from China's role as a low-cost assembler of components from other countries.

The mother of an American college student arrested in central China following an altercation with a taxi driver five weeks earlier said police are demanding the equivalent of a $7,400 "ransom" for his release

The UN human rights chief says he intends to keep pressuring China to allow the wife of the late Nobel Peace Prize laureate Liu Xiaobo to move freely and leave the country if she wants to go elsewhere

Police in central China have arrested an American college student on charges of intentional injury following an altercation with a taxi driver

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
European Central Bank head Mario Draghi does his best to give no clear signal about the eventual withdrawal of a massive bond-purchase stimulus program, lest markets overreact

European Central Bank President Mario Draghi says the bank needs "persistence" and "patience in keeping the current stimulus in place"

European Central Bank President Mario Draghi says that measures of inflation "remain overall at subdued levels," adding that means the 19 country eurozone needs continuing monetary stimulus

The European Central Bank leaves its interest rate benchmarks and policy statement unchanged, underlining its unwillingness to roil markets with premature signals about an exit from its stimulus efforts

Official figures show that retail sales in Britain bounced back during June, with the warm weather bolstering clothing sales in particular

ADB growth forecasts for developing Asia upgraded on stronger export demand from China

Japan central bank keeps monetary stimulus intact, downgrades inflation outlook

Shame Cersei, you lost your food supply: Game of Thrones confronts resource shortages

Official figures show that inflation in Britain unexpectedly fell in the year to June, a development that's likely to ease market expectations that the Bank of England will raise interest rates soon

A survey of investment analysts shows optimism about the German economy fell slightly in July

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt
Audio Slideshow
Panorama of Tiananmen Square
Remembering Tiananmen

BEIJING (AP) -- China's economic growth held steady in the latest quarter, boosted by unexpectedly strong trade and consumer spending, despite fears tighter lending controls aimed at cooling a surge in debt are weighing on commercial activity.

Output rose 6.9 percent in the three months ending in June from a year ago, data showed Monday. That was in line with the previous quarter and better than many forecasts.

Communist leaders are eager to keep growth steady as they head into a ruling party congress at which President Xi Jinping is due to be reappointed as leader later this year. But the economy faces headwinds as Beijing clamps down on lending to rein in a surge in debt that has fueled fears it might harm the financial system or drag on growth.

Forecasters expect the economy to cool as those controls depress investment, the biggest component of growth in recent years.

"The economy appears to have ended Q2 on a strong note," said Julian Evans-Pritchard of Capital Economics in a report.

"This strength seems unlikely to last, however," he wrote. "The recent crackdown on financial risks has driven a slowdown in credit growth, which will weigh on the economy during the second half of this year."

The International Monetary Fund has forecast China's full-year growth for 2017 to hold steady at last year's level of 6.7 percent. The IMF raised its outlook twice this year, citing strong government spending.

The government's growth target is 6.5 percent "or higher if possible."

Consumer spending and trade growth both accelerated during the second quarter, helping to offset softening investment in factories, real estate and other fixed assets.

Retail sales rose 10.4 percent in the first half of the year, up 0.1 percentage points from the first quarter's rate, according to the National Bureau of Statistics. Factory output rose 6.9 percent in the first half, up 0.1 percentage points from the first quarter rate and 0.9 percentage points better than the same time last year.

Trade data released earlier showed export growth accelerated in May and June, at least temporarily averting concern about possible politically dangerous job losses in trade-related industries that employ millions of people.

Investment rose by 8.6 percent in the first half of the year, but that was down from 0.6 percent from the first quarter's expansion.

Private sector analysts cite surging debt as the biggest potential risk to China's long-term economic stability.

China has relied on infusions of credit to prop up economic growth since the 2008 crisis. Total nongovernment debt rose from the equivalent of 170 percent of annual economic output in 2007 to an estimated 260 percent last year, unusually high for a developing country.

The Moody's rating agency cut Beijing's credit rating May 25 and the IMF urged Beijing on June 14 to get debt under control.

Regulators have cited reducing risk in China's financial system as a priority this year. Banks have been told to look closely at borrowers, especially those trying to make acquisitions abroad, to ensure they can manage their debts.

The country's top economic official, Premier Li Keqiang, tried to quell fears with a speech last month at the World Economic Forum in the northeastern city of Dalian. Li said financial risks are "generally under control" and Beijing can achieve this year's development targets.

At a weekend meeting of the Chinese leadership on financial strategy, Xi called for the state-dominated financial system to "prevent and contain financial risk." He called for financial services to "go back to the origin" and focus on "serving the real economy" instead of supporting speculation.

Analysts said that is likely to lead to creation of new regulatory structures, though a report issued following the meeting called for "appropriate sequencing," suggesting Beijing might move more slowly than some reform advocates want.

"We do not foresee major opening moves" on easing controls on China's currency or allowing money to move into and out of the economy more easily, said UBS economist Tao Wang in a report.

---

National Bureau of Statistics (in Chinese): www.stats.gov.cn

© 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.