The Chinese economy expanded 7.9 percent year on year in the second quarter, as massive pump-priming and record lending pushed for a rebound from the worst growth figures in a decade, official data showed Thursday.

The gross domestic product (GDP) grew 7.1 percent from the same period a year ago to 13.99 trillion yuan (2.06 trillion U.S. dollars) in the first half, after the world´s third largest economy tumbled to 6.1 percent in the first three months, according to the National Bureau of Statistics (NBS).

Zhuang Jian, a senior economist with the Asian Development Bank told Xinhua Thursday that the full-year growth of eight percent is within reach, as the hefty government spending has countered the impact of tumbling exports. He expected the economy will expand at around 9 percent in the second half.

Li Xiaochao, spokesman with the NBS said at a press conference that the government´s stimulus package has generated a "remarkable" result as the economy is rebounding and the positive factors are accumulating.

But he also noted that "the difficulties and challenges are still numerous ahead, since the economic revival is not on solid footing, and the recovery momentum is not stable,"

He warned that many uncertainties remained as the economy still suffered from shrinking external demand, excess capacity and weak private consumption.

Since last November, the Chinese government has adopted a series of stimulus measures including a 4-trillion yuan investment package, tax cuts, and consumer subsidies to shore up growth and employment.

The government has set a full-year GDP growth target of 8 percent, a level which is rare in the developed economies, but is the minimum to maintain full employment in a nation with 1.3 billion people.

Earlier this month, the International Monetary Fund raised its forecast of China´s 2009 growth by one percentage point to 7.5 percent. The World Bank also adjusted its figure from 6.5 percent to 7.2 percent.

Chinese shares shrugged off the upbeat Q2 data, and ended 0.15percent down Thursday to close 3183.74.

Economic restructuring urgent According to the NBS data, investment contributed 6.2 percent of the GDP growth, and consumption did 3.8 percent. Exports, which slid for eight straight months, dragged down growth by 2.9 percent.

Zhuang Jian said that government-led investment and ample credit are the main reason behind the growth.

Benefiting from the massive government spending in the construction of railways, roads and infrastructure, the urban fixed asset investment rose 33.6 percent in the first half, the largest increase in five years.

Industrial output rose 10.7 percent last month, a recovery from just 3.8 percent in the first two months.

Fan Jianping, an economist with the State Information Center (SIC), a government think-tank, told Xinhua Thursday that the industrial output recovery was due to the end of the de-stocking process carried out by domestic manufacturers, not the full recovery of domestic demand.

Zhuang Jian noted the government should make more efforts in restructuring the unbalanced economy in the second half, other than simply retaining the fast growth rate after the sharp decline was stopped.

After a double-digit growth for five years, China has striven to shift from too much reliance on exports and investment to domestic spending, after the global financial crisis sapped demands for Chinese goods.

The government has boosted subsidies on the purchase of automobiles and home appliances, and unveiled tax cuts to spur private spending.

NBS data showed retail sales, which reflected consumption, kept moderate growth, adding 15.0 percent in the first half.

Fan Jianping noted that compared with measures to lift investment and exports, consumption support is still not enough.

He said the fundamental means to spur spending is to let government share more resources with the private business to make people better-off, as well as beef up the social safety net.

Complex monetary maneuver China´s consumer inflation fell 1.7 percent year on year in June, representing the worst contraction since October 2002. The inflation index at wholesale level dropped 7.8 percent, the lowest in a decade.

However, bank lending hit a record 7.37 trillion yuan in the first half, as the government looked to a moderately easy monetary policy to support economic recovery.

The broad measure of money supply (M2), which covers cash in circulation and all deposits, rose by a record 28.46 percent year on year by the end of June, adding concerns that the ample money supply will sow the seed of inflation.

Li Xiaochao said China should not neglect future inflation risks, as global commodity prices are rising and domestic loans are surging.

He also said prices are currently falling, and domestic demand remained inadequate.

The government will closely watch for price fluctuations to prevent inflation risks, he said.

Fueled by the muscle of ample liquidity, Chinese shares have rallied more than 70 percent from the beginning of the year, posting the best performance in the world.

Property sales climbed 53 percent year on year to 1.58 trillion yuan as investors took advantage o