- Chinese Gross Domestic Product Growth nudged ahead of expectations in the second quarter
- Industrial production meanwhile raced ahead, helped by soaring steel output
- Retail sales looked very perky too, but that had been expected
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The Australian Dollar got a boost Monday as a bevy of Chinese economic data came in strongly, headed by official growth figures.
Gross Domestic Product expanded 6.8% on the year in the second quarter, they showed. This was just better than the 6.8% expected and the same rate as that seen in the first three months of 2017. Beijing targets growth of above 6.5% this year, after last year’s 27-year low of 6.7%.
Investors had worried that increased official focus on debt levels and financial regulation could have cramped the Chinese economy’s second-quarter style, but that does not seem to have been the case. The statistics office said that first-half growth has laid a “solid foundation” from which to build, but did note – as is now almost internationally obligatory – that plentiful ‘uncertainties’ remain.
June’s industrial production figures saw daylight at the same time as the GDP report and they came in very strongly too. The 7.6% annualized rise was hugely above the 6.5% markets expected and came on the back of record steel output. In fact, the eventual destination of all that steel may be the one bugbear in this data release. Accusations of Chinese steel dumping have been made in western countries and contributed to a rise in protectionist rhetoric, which has not so far been backed by action.
Retail sales were strong too, rising 10.6%, but that was as forecast.
Overall the data deluge shows China heading into the year’s second half in pretty good shape. Worries about debt will doubtless endure, with overall levels now close to 230% of GDP. However, for the moment fallout appears to be contained. Fitch Ratings affirmed its “A+” China raging just last Friday, although it did flag debt levels as a risk.
The Australian Dollar picked up a little after the numbers, as well it might, given Australia’s huge commodity export links with China. However, AUD/USD had slipped before the data, with no obvious catalyst, suggesting perhaps that some had feared weaker Chinese numbers than they got.
AUD/USD topped 0.78 for the first time in two years Friday as investors rethought the chances of many ore US interest-rate increases ahead. Australian rates meanwhile remain at record lows and are likely to stay there at least until well into 2018.
-- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX