According to National Accounts data released today, the Chinese economy grew 1.7% in the June quarter to be 7.5% larger than the same period last year. This result is in line with our forecast for the quarter, but is a solid outcome relative to the recent spate of soft partial indicators nonetheless. In contrast to rebalancing objectives, official data show that growth over the year in H1 2013 was driven by investment (contributing 4.1ppts to growth), followed by consumption (3.4 ppts). Net exports made a negligible contribution. Revised q-o-q growth rates suggest the economy’s growth momentum has stabilised at a slower pace than we saw towards the end of 2012. While some of the slowing has been an intentional attempt by authorities to achieve more sustainable (and balanced) growth, maintaining this pace of growth (6.8% saar) for H2 2013 would see annual growth dip below the government’s target of 7.5%.
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NAB