China GDP beat expectations, but its markets are rattled - here's why

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Chinese economy beats all targets

Economists polled by Reuters expect the economy grew 1.7% between April and June-an annualised rate of 6.8%.

The result leaves China well placed to meet its 6.5% growth target for the year, though concerns remain over how sharply the economy will slow in the second half.

Factory output also picked up in the second quarter, though the 6.9 percent growth for the first half was only a slight pickup from recent quarters. Industrial output, which rose 7.6% from the same period past year, paced the GDP gains, while an 11% surge in retail sales underscored the strength of the domestic consumer economy.

Power output increased 6.3 percent year on year to 2.96 trillion kilowatt-hours in the first half of 2017, the NBS said.

At the National Financial Work Conference, President Xi Jinping clarified that regulatory tightening would continue quickly with a Commission for Financial Stability established.

With risks rising in some parts of the economy due to leveraged investments and over-borrowing, officials need to carefully balance support for growth with risk controls.

Last week's data showed that China's exports, as well as imports in June, grew more than expected from a year before, which may offset sluggishness in other parts of the economy in the second quarter of this year.

China's strong momentum has fueled global economic expansion and boosted sentiment in worldwide markets. "And with little sign of global inflationary pressure from either labor markets or commodity prices, this global expansion has room to run".

In 2016, China's GDP grew 6.7 percent, which is its worst performance in the past 26 years.

Debt-fuelled investment in infrastructure and real estate has underpinned China's growth for years but warnings of a potential financial crisis have spurred Beijing to clamp down.

First, planned new investments have lost steam entering the year of 2017, suggesting that fiscal spending has been gradually fading.

The news comes as the government focuses on reining in the country's rapidly ballooning debt.

"China's crackdown on low-end steel has left a capacity gap in the market", she said.

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