China's reported GDP growth widely considered to be flawed

China has reported its GDP growth for the second quarter and the figures have come in at 6.7%, which is on course for the Beijing government's target of no lower than 6.5% for the year. However, this statistic is generally seen as flawed with the country in fact grappling with an economic slowdown, and unanswered questions about the health of its financial system. The issue is that these figures encourage banks and investors to build up more debt with the confidence that the government will bail out any inconvenient losses, therefore debt begets more debt.

China's economy narrowly beat estimates Friday with a 6.7 percent expansion on-year in the three months through June, as a string of stimulus measures from the government and the central bank helped shore up demand.

Economists polled by Reuters had anticipated a growth rate of 6.6 percent.

The headline figure from the National Bureau of Statistics was steady from the previous quarter's 6.7 percent pace.

Second quarter Gross Domestic Product (GDP) was up 1.8 percent from the first quarter, Reuters reported.

The Chinese government is aiming for growth of 6.5 to 7 percent this year, a slower pace than what the world's second-largest economy had got accustomed to in the past two decades.



China's economy is gradually transitioning to a greater reliance on consumption compared with a previous emphasis on manufacturing but the transformation hasn't been all smooth-sailing. For 2015, Beijing logged 6.9 percent growth, its slowest pace in 25 years.

The country's second quarter GDP figure was not unexpected, as China has been careful to prep markets for further signs of a gradual deceleration.

Chinese premier Li Keqiang said this week that the the Chinese economy was "basically stable," following comments on July 4, reported by state media agency Xinhua, that it was "not easy" to achieve Q1's 6.7 percent growth rate and that the economy would show "continued steady development."