China's second quarter GDP growth comes in exactly on target at 7.5%--if you can believe it

07/15/2013 12:32 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Official data released today by the National Bureau of Statistics show that China’s economy grew by 7.5% year over year in the second quarter. That’s a drop from the annualized 7.7% growth in the first quarter but exactly in line with expectations among economists surveyed by Bloomberg. The 7.5% growth rate is also exactly in line with the official government target of 7.5% growth for the year.

I love this quotation on Bloomberg from Howard Wang who manages $9 billion for JPMorgan Asset Management in Hong Kong” The market has factored in a reasonably negative outlook for the economy and this number, if people believe it, eases the worries a little bit.”

“If people believe it.” Exactly the question. For the moment they do—if not with any great excitement. Stock markets are in the green across the globe today as of 11:30 a.m. New York time.

I’d caution against drawing much in the way of conclusions from the upwards move in Hong Kong and Shanghai. The Chinese government balanced today’s data release on the economy with a change in regulations that almost double the quotas—to $150 billion—that qualified foreign institutional investors can put into China’s mainland markets. It’s not exactly a coincidence that big Chinese brokerage companies led the market up today. Citic Securities (6030.HK) was up 2.14% in Hong Kong and 3.98% in Shanghai trading. Haitong Securities (6837.HK) was up 3.82% in Hong Kong and 3.98% in Shanghai.

Other data released today confirmed the slowdown in economic growth. Industrial production climbed 8.9% year over year in June, according to the National Bureau of Statistics. That was below the consensus forecast of 9.1% growth among economists surveyed by Bloomberg. Wholesale prices—what’s known as prices at the factory gate—fell for a 16th straight month signaling that demand remains weak in the economy. Retail sales, though, grew at a 13.3% annualized rate in June, after climbing at a 12.9% rate in May. The consensus forecast was for a 12.9% growth rate.

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