China: GDP beats expectations again in Q2

Chinese GDP higher than forecast in Q2; we expect 2017 GDP growth of 6.8%.

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Chinese GDP for Q2 2017 grew by 6.9% year-on-year (y-o-y) in real terms, the same pace of expansion as in Q1. The growth figure beats both the consensus forecast and our own estimate.

We have decided to revise our Chinese GDP growth forecast for 2017 to 6.8% from 6.5%, and the forecast for 2018 to 6.3% from 6.2%. These revisions reflect both the stronger-than-expected growth in Q2 and a better outlook for the near term as suggested by the latest data, in particular related to fixed asset investment.

Three factors have led to the positive surprise: a resilient property market, strong infrastructure investment and rising global demand.

The People’s Bank of China (PBoC) will likely maintain a neutral policy stance with a tightening bias for the rest of the year. If interest rates for general loans and mortgage loans rise as a result, it will likely have a negative impact on growth in H2 2017.

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