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Chinese economy grew 7.5% on year in 2Q

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China’s economy grew by 2% in the second quarter of the year and by 7.5% in year-on-year terms, a modest improvement from 7.4% in the first quarter and a sign that the authorities’ efforts to stop it slowing further have succeeded, at least in the short term.

The increase in the annual growth rate was the first in three quarters, and a slight uptick from what had been the slowest annual rate in two years in the world’s second-largest economy.

The central bank has relaxed reserve requirements for banks and taken other measures in recent months to keep the economy from a “hard landing”. The effects of those measures are already visible in rebounding factory output and business confidence. Industrial output grew 9.2% in the years to June, up from 8.8% in the year through May.

However, that has meant pushing back plans to rein in credit growth, too much of which is still going into unproductive companies or to speculative real estate projects.

Figures released Tuesday by the central bank had showed bank lending to the economy growing much faster than consensus forecasts, but doubts about the quality of that lending have risen in recent months as reports of vacant and unsold properties have risen, suggesting that a real estate bubble is deflating. Housing sales were down 9.2% in the first half of the year.

Local financial markets sold off slightly, owing to disappointments at other data released by the National Bureau of Statistics. Retail sales growth in particular came in at a lower-than-expected 12.4% on the year in June, suggesting slower progress in reorienting the economy more toward domestic consumption.

Separately, Beijing had announced plans late Tuesday for a pilot program to bring private investment into some of the largest enterprises owned by the central government, including China National Building Materials Group and China National Pharmaceuticals Group Corp., with a view to raising efficiency at those companies, but had provided few details about how it would proceed.