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China growth of 7% beats forecasts as activity warms up

Second quarter of 2015 ended with a stock market crash in China
Second quarter of 2015 ended with a stock market crash in China

China's economy grew an annual 7% in the second quarter, steady with the previous quarter and slightly better than analysts' forecasts, though further stimulus is still expected after the quarter ended with a stock market crash. 

Monthly activity data, released alongside the GDP report, also beat expectations across the board to show signs of a rebound, with factory output hitting a five-month high, following reports of increased bank lending earlier this week. 

It has been a difficult year so far for the world's second-largest economy. 

Slowing growth in trade, investment and domestic demand has been compounded by a cooling property sector, deflationary pressure, and the recent equity market panic.

Signs of improvement may help buttress faltering investor confidence in the effectiveness of Beijing's management.

China will still need to provide liquidity to buttress its still-rickety stock exchanges - which the statistics bureau described as key to economic stability.

It also wants to reduce the cost of corporate financing, which remains far higher than returns on investment for many companies.

Economists have also called for more direct fiscal stimulus to help support local governments as they grapple with a mountain of debt. 

Chinese fiscal expenditure rose 13.9% on an annual basis in June, a sharp rise from May's low 2.6% but well below April's 33.2% spike. 

The surprisingly positive readings have some analysts questioning the accuracy of official data, suggesting they are more about reassuring investors than true reflections of performance. 

For example, June power output only increased 0.5% year-on-year, even though factory output climbed 6.8%.

The National Bureau of Statistics rejected suggestions that figures were being inflated.