Reuters reported that Chinese factories ramped up production in August and money growth easily topped expectations showing that the economy remained buoyant despite government efforts to clamp down on bank lending and property speculation.
Investment was also resilient, while inflation sped to its fastest pace in 22 months though the bulk of price rises stemmed from higher food costs, which analysts have said should be transitory after a spell of bad weather across China this summer.
Markets have been worried that global weakness alongside the official campaign to rein in property prices and bank loans could weigh on China but the suite of August data painted the picture of an economy that was gliding into the softest of landings.
Mr Wang Han economist with research and advisory firm CEBM said that the August economic indicators and the recovery in industrial output in particular confirm the economy's stabilizing trend and show that it has more internal drive.
Mr Tom Orlik economist with Stone & McCarthy Research Associates in Beijing said that the headline number looks high, but it's all food. Non-food is low. Producer prices are still falling.
The gains in industrial output and money growth were more surprising. Industrial production rebounded to rise 13.9% YoY after slowing to 13.4% in July.
Economists polled by Reuters had forecast a rise of 13.0%. The broad M2 measure of money growth sped up to 19.2% in August blowing past expectations of a 17.5% increase.
The rise came alongside slightly stronger than expected bank lending, with the stock of outstanding loans in the economy up 18.6% the first acceleration in 4 months.
Investment was another data point that revealed unexpected strength with capital spending in urban areas up 24.8% in the first 8 months of the year compared with the same period in 2009.
Although the market has been focused on property tightening, Yu Song and Helen Qiao, economists at Goldman Sachs, asserted that the government had in fact been loosening policy by speeding up infrastructure investment in recent months.
The magnitude of such a loosening was never clear and yesterday's imports and today's fixed asset investment and industrial production suggest the magnitude might be greater than we initially expected.
Mr Stephen Green an economist with Standard Chartered in Shanghai said that the government could ease lending restrictions and approve more investment projects towards the end of the year to counter headwinds such as a US slowdown.
He said that add all that together, and we think that the economy, despite possibly some short term volatility in sentiment as exports and housing decelerate is in a bit of a sweet spot. Not too hot and not too cold.