China's GDP expanded 7.0 percent year-on-year in the second quarter, official data showed Wednesday, beating expectations as months of central bank policy stimulus helped support the world's second-largest economy.

The gross domestic product figure announced by the National Bureau of Statistics (NBS) matched the 7.0 percent expansion in the first three months of this year, and exceeded the median forecast of 6.9 percent in an AFP survey of 14 economists.

The figure was in line with the government's official target for GDP growth this year of "about 7.0 percent".

The better-than-predicted GDP result encouraged some economists to nudge their full-year forecasts higher.

China's economy, a key driver of world growth, expanded 7.4 percent last year, slower than the 7.7 percent in 2013, and its weakest annual growth since 3.8 percent in 1990.

The slowdown has been a major factor in a global fall in commodity prices, and so far the economy has largely failed to pick up momentum this year.

"The domestic and external economic conditions are still complicated," NBS spokesman Sheng Laiyun said. "The global economic recovery is slow and tortuous and the foundation for the stabilisation of China's economy needs to be further consolidated."

But in more bullish remarks he added that the figures showed growth had "stabilised" and was "ready to pick up".

"It's very likely economic growth in the second half will be better than the first half," he added, citing positive factors including policy support and a recovery in the property market.

Chinese authorities are looking to diversify growth away from big-ticket projects -- that helped drive years of double-digit GDP expansion -- to consumer demand, which is seen as more sustainable. But too fast a deceleration in investment can be harmful to overall growth.

They have been taking more aggressive preemptive steps with the People's Bank of China (PBoC), the central bank, cutting benchmark interest rates four times since November and reducing bank reserve requirements in a bid to boost lending.

Such measures can take time to affect growth.

- 'Upside risk' -

The NBS also said industrial output, which measures production at factories, workshops and mines, rose 6.8 percent year-on-year in June, accelerating from May's 6.1 percent.

It was ahead of a median forecast for 6.0 percent expansion in a survey of economists by Bloomberg News.

Retail sales, a key indicator of consumer spending, increased 10.6 percent last month from the year before, the NBS said, a faster pace than May's 10.1 percent.

It also beat a Bloomberg News survey's median 10.2 percent.

And fixed asset investment, a measure of government spending on infrastructure, expanded 11.4 percent in January-June year-on-year, the same as for the first five months of the year and remaining at its lowest since 2000.

In light of the figures Nomura lifted its annual GDP forecast from 6.8 percent to 6.9 percent.

But it cautioned in a note that "headwinds from property investment and overcapacity remain" and authorities were likely to further ease monetary policy this year.

Chaotic trading on the country's key stock markets in recent weeks has added to uncertainty. However, Julian Evans-Pritchard, China economist at capital Economics, said in a note that GDP benefitted temporarily during the second quarter as a whole from the "unsustainable surge in financial sector activity".

"Looking ahead, the support to growth from the financial sector should soon fade," he said.

"But the recent step-up in policy support will limit the downside risks," he added.

Despite the positive GDP figure, China's benchmark stock index closed down 3.03 percent as investors questioned whether there would be more stimulus measures.

"The GDP numbers are really good," Bernard Aw, a Singapore-based strategist at IG Asia told Bloomberg News. "The better-than-expected GDP reading suggested that Beijing may take its foot off the pedal on more stimulus measures for the time being. This will affect sentiment in the stock market."

China's total trade declined in the first half of this year, official data showed Monday, falling well short of the government's targets, and posing a significant weight on growth. Manufacturing has also languished with official and private surveys showing it hovering near the borderline between expansion sand contraction.

"The resilience of retail sales in June is a further encouraging sign that downside risk, while not negligible, is receding, despite recent equity-market volatility," Andrew Colquhoun, head of Asia-Pacific Sovereigns at Fitch Ratings, wrote in reaction to the data.

"Nonetheless, the longer-term outlook remains one of structural slowdown as the economy works through a painful process of adjustment and deleveraging."

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Nomura