China's economy expanded at 6.9% in the second quarter as increased exports and the country's ongoing property boom continued to support growth.
Defying government and analyst forecasts of a dip to 6.8%, the country's economy has posted growth of 6.9% in both quarters so far this year and is on track to record its first year-on-year acceleration since 2010.
Back in March, China's government ratified a growth target of 6.5%. In 2016 annual growth was 6.7%.
Production and retail sales
There were indications on Monday that surging factory output contributed to overall growth, as industrial production jumped 7.6% in June after May's impressive 6.5% leap, and beating expectations of an unchanged 6.5%.
"The industrial complex remained strong in the second quarter," said Freya Beamish at Pantheon Macroeconomics. "The pinch for industry will come in the third quarter when producer price inflation really slows."
Meanwhile, retail sales were also stronger in June, rising at an annual pace of 11% up from 10.7% in May and beating expectations of a dip to 10.6%.
Construction and property sales contributed additional weight to the growth data in the third quarter, but many – even including the Chinese government – are concerned about a growing bubble in the market.
Attempts by the government to cool the market have backfired.
Rules demanding higher down payments and state banks raising interest rates have only driven more people into the market for fear of getting left behind if more drastic conditions are imposed.
Many are borrowing heavily to afford their new properties, and concerns are also rising over the growing credit bubble.
Government efforts to wring some of the debt out of the economy are likely to continue and some analysts believe this could have an impact on growth later in the year.
“We expect a slowdown in the second half of the year,” said Craig Botham, emerging market economist at Schroders.
He added: “Credit tightening continues, and generally impacts the economy with a lag. We as yet see no reason that this should not be true this year.”
The latest IHS Markit business outlook survey suggested sentiment among China's business executives weakened in June.
Respondents highlighted tough competition, raw materials shortages and unstable market conditions as key threats to the outlook.
The survey also suggested that investment by companies would slow this year and inflationary pressures were forecast to soften.
“Lower levels of confidence were recorded across both the manufacturing and service sectors to suggest a broad-based growth slowdown in the next year," said Annabel Fiddes at IHS Markit.
Financial markets were boosted by the higher than expected GDP and production data.
Industrial commodities such as copper were among the biggest movers. Copper rose 1.1% to $271.90 per tonne, while iron ore was up 1.6% at $65.95 per tonne.
There were mixed fortunes for equity indices, however. The Hang Seng in Hong Kong gained 0.3% while the Shanghai Composite was down 1.4%.
Ahead of the data release, however, the Shanghai index had been 2.5% lower and recovered some ground following the GDP report.