Overseas media and economists saw signs of confidence in the Chinese economy after the country’s statistics authorities released economic indices for the first half of the year.
Preliminary figures show that China’s gross domestic product reached 29.6868 trillion yuan, increasing 7 percent from the same period last year, the National Bureau of Statistics said on July 15.
GDP in both the first and second quarters of 2015 recorded a 7 percent year-on-year increase.
“The result buoys prospects for Premier Li Keqiang’s 2015 growth target of about 7 percent and the outlook for the world economy, with China stabilizing and the US forecast to accelerate,” Bloomberg said in a report on July 15.
“Downside risks are getting smaller,” Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong, told Bloomberg. “A modest recovery is expected in the second half.”
Tom Rafferty, Asia economist for Economist Intelligence Unit told Financial Times that the 7 percent growth “was a strong out-turn for the economy and above our forecast”.
Retail sales in the first half of the year exceeded 14 trillion yuan, with a nominal year-on-year growth of 10.4 percent. Retail sales in June showed 10.6 percent nominal year-on-year growth, according to the National Bureau of Statistics.
“The resilience of retail sales in June is a further encouraging sign that downside risk, while not negligible, is receding, despite recent equity-market volatility,” Reuters quoted Andrew Colquhoun of Fitch Ratings as saying.
Economists are upbeat about the economic outlook and believe the government’s full-year growth target, set at around 7 percent for 2015, is attainable despite growing concerns about recent volatility in the stock market.
Zhu Zhenxin, an analyst with Minsheng Securities, said the services sector became a key economic driver, growing 8.4 percent in the first half, outpacing general GDP growth.
Steven Zhang, an analyst from Morgan Stanley Huaxin, said the stock market rout will have limited negative impact on the real economy due to bold regulatory measures that prevented risks from spreading to sectors including real estate while the bubble is still controllable.
UBS said in an earlier report that it does not anticipate the stock market rout will lead to systemic financial problems in China, with only a limited impact on the real economy.
After years of slowdown, it is widely anticipated that the much-pressured economy will finally bottom out and regain momentum during the rest of the year.
Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch Ratings, said he expects a further sequential pick-up in the second half following recent monetary and credit policy easing.
Lian Ping, chief economist with Bank of Communications, forecast a stronger second half will bring the full year growth rate to 7.1 percent on recovering exports and stronger domestic consumption.
HSBC economists agreed. “In order to strengthen and sustain the recovery, more policy easing measures are still needed and likely in the second half. We forecast another 25 basis points of policy rate cut and 200 basis points reserve ratio cut,” an HSBC report said on July 15.