China maintains 7% GDP growth, but anxiety continues

China`s economy grew a stronger-than-expected 7 percent in the second quarter, but anxiety over its downturn is continuing. The Shanghai and Shenzhen stock markets plunged Wednesday, raising concerns that the Chinese government`s stock price boosting efforts are having limited impact.

The National Bureau of Statistics of China announced Wednesday that China`s GDP grew 7 percent in the second quarter from a year earlier, which was higher than market forecast of 6.8-6.9 percent. However, the figure was unchanged from that in the first quarter when GDP growth had marked the lowest since the first quarter of 2009.

The Wall Street Journal said Wednesday, "China`s growth remained at 7 percent in the second quarter, a level economists had deemed unlikely," adding it "could renew a debate about the reliability of Chinese statistics." In the first quarter too, most forecast institutions had expected growth of below 7 percent but Chinese government announced a 7 percent figure, which had sparked disputes.

Bloomberg predicted a 6.8 percent growth for the second quarter. The International Monetary Fund maintained a 6.8 percent forecast. Right before the official GDP announcement, the state-owned Xinhua News Agency forecast a below 7 percent data. Other state-owned institutions in China also presented a 6.9 percent figure.

The economy appears to veer little from its recent slowdown course, due to a series of indicators pointing to economic downturns while stock markets have declined. Data released on Monday showed that exports in June rose 2.1 percent year-on-year, turning upwards for the first time in four months. Imports fell 6.1 percent, reflecting a sluggish domestic demand.

Peking University business professor Michael Pettis told the Wall Street Journal Monday that there is high possibility that China can face an economic crisis, adding that the next two to three years will be very important. Pettis said with Chinese stock markets plunging, if financial institutions keep on depending that the government will come to rescue them that they can ne negligent in boosting financial soundness.

The Wall Street Journal said Tuesday that as the Chinese government artificially boosted stock prices when stock markets crashed in the past month, foreign investors started to flow out. It meant that confidence on China`s "financial communism" is collapsing.