FTSE 100 miners' shares rise on encouraging China GDP figures

Yolanda Curtis
July 18, 2017

Major pick-up in pace in June: All major indicators, including manufacturing activity, trade, and investment picked up the pace of growth in June, propelling the economy to faster growth overall in Q2 2017. While China's first-half economic achievement was "hard won", more positive changes in the second half are expected, National Statistics Bureau spokesman Xing Zhihong told reporters.

Onshore yuan rose for a sixth day on Monday after China's central bank raised the currency's daily reference rate amid a declining U.S. dollar and after the release of China's GDP data.

Last year, the world's second-largest economy had its slowest growth rate in nearly 30 years, at 6.7 percent.

FTSE 100 miners' shares rise on encouraging China GDP figures

Industrial production climbed 7.6 percent on year, topping expectations for an increase of 6.5 percent - which would have been unchanged from the previous month.

China's factory output grew 7.6 percent in June from a year earlier, the fastest pace in three months, while fixed-asset investment expanded 8.6 percent in the first six months of the year, both beating forecasts.

China's economy is holding steady.

"We do have doubts about how sustainable the recovery is", said Julian Evans-Pritchard, a China economist for Capital Economics, adding that the economy has "been very reliant" on government stimulus, rapid credit growth and a relatively loose monetary policy.

The strong data suggest across-the-board robustness in the industrial sector in June, said Zhu Haibin, chief China economist at JPMorgan Chase & Co.in Hong Kong.

Ultimately, the strong economic numbers paint a picture of growth and stability, which is exactly the kind of outlook that the Chinese government wants before the upcoming 19th National Party Congress in autumn 2017. "We're now in an upward trend of the economy which makes it less painful and much easier to push ahead".

Confidence in the robustness of the recovery was not universal, however.

Central banks around the world are focused on the persistent low inflation, and the PBOC is no different, with CPI inflation printing 1.5 per cent in June, largely in line with market expectations. Chinese exports rose only 9.1 percent in the second quarter.

Synchronized growth in most developed markets has meant exports have helped keep the expansion on track, and the effects of property market cooling are yet to kick in.

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