China's GDP rose 0.7 percent on the quarter in the three months to June, slowing sharply from growth of 1.6 percent in the three months to March, with year-over-year growth also moderating from 5.3 percent to 4.7 percent. This was weaker than the consensus forecast for quarter-over-quarter growth of 1.0 percent and year-over-year growth of 5.1 percent. Monthly data also published today showed weaker growth in key activity indicators and a sharper decline in house prices.

Officials characterised GDP and the monthly data published today as showing that"the national economy was generally stable with steady progress". However, they also cautioned that"the external environment is intertwined and complex, the domestic effective demand remains insufficient and the foundation for sound economic recovery and growth still needs to be strengthened". After noting in recent months that they will seek to"frontload and effectively implement" macroeconomic policies that have already been introduced, today's statement did not contain this language, perhaps indicating that some adjustment to policy settings may be considered in the near-term.

In addition to GDP growth, monthly data published today were also generally weaker than expected. The China's RPI and RPI-P, however, rose from minus 29 and minus 30 to minus 7 and zero respectively, indicating that recent Chinese data in sum are now coming in close to consensus forecasts.

Second-quarter GDP is expected to rise 1.0 percent versus the first quarter which would compare with 1.6 percent sequential growth from the fourth quarter. The year-over-year expectation in the second quarter is growth of 5.1 percent which would compare with 5.3 percent growth in the first quarter.

Gross Domestic Product (GDP) refers to the final products at market prices produced by all resident units in a country (or a region) during a certain period of time. GDP is the core indicator of the national accounts, and also an important indicator to measure the economic conditions and the level of development of a country or region. GDP is calculated from three approaches -- production, income and expenditure -- which reflect gross domestic product and its composition from different angles.

GDP is the all-inclusive measure of economic activity. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

The data are compiled by NBS and the People's Bank of China (PBoC). Estimates for non-financial corporations, financial corporations, general government, household and the rest of the world sectors are published. The production accounts, distribution and use of income account, and capital account data are compiled by NBS. NBS also develops the financial account by rearranging financial transactions data in the flow of funds accounts compiled by PBoC. There are no breakdowns of government consumption expenditure, gross fixed capital formation, change in inventories and net exports. Household consumption expenditures are broken down into urban and rural. The income components of GDP are only published in the input-output tables. NBS uses the Chinese Industrial Classification of the National Economy.