The Chinese economy grew faster than expected in the second quarter, expanding 6.9 percent.

Financial analysts had forecast a lower GDP growth rate of 6.8 percent.

Driven in part by higher exports and a boost in production, particularly of steel, the second-biggest economy in the world is on track for its first year-on-year acceleration since 2010 — leaving many economists scratching their heads over what exactly is driving it.

Shilen Shah, a bond strategist at Investec Wealth & Investment, said in a statement issued to Verdict:

The better than consensus print for Chinese second quarter GDP (6.9 percent vs. 6.8 percent) suggests that the economy is maintaining momentum with both industrial output and fixed asset investment somewhat stronger than estimates. Despite concerns over China’s so called shadow banking system, the global economic recovery seems to have supported second quarter GDP. Retail sales were somewhat stronger; however, the underlying data suggests that external demand and cap-ex remain the key drivers of growth.

How reliable is the data?

China’s economic numbers have long been a contentious issue.

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By GlobalData

The country — which now boasts the world’s second largest economy — is the first to update economists and investors with each of its quarterly GDP readings, usually getting them out in under three weeks after the end of each quarter.

It also never issues updates or revised readings — something that has become a regular feature in most large economies as data collectors sift through and try to organise the complex numbers.

In the medium to long-term, China’s economic outlook is even less clear than the official numbers would suggest.

Rising debt continues to pose a risk to China’s growth, the property market bubble could burst, especially in big cities and manufacturing is at overcapacity.

The National Bureau of Statistics admitted that:

There are still many unstable and uncertain factors abroad and long-term structural contradictions remain prominent at home.

China’s central bank has reportedly advised banks to place limits on mortgage lending in an effort to temper the property market.

“I still expect a broad slowdown, led by property,” said Larry Hu,  head of greater china economics at the Macquarie Group. “The government has unlimited tools to roll out, so ultimately they can cool the market down. It just hasn’t been enough yet.”

Citi bank raised its 2017 annual GDP projection for China to 6.8 percent year-on-year from 6.6 percent previously.