Economists polled by Reuters on average had expected 6.8 percent growth in the April to June period against the same time last year, compared to the first quarter's 6.9 percent.

The country said its second-quarter GDP growth was 6.9 percent against the prior year, and that comes as investors watch the world's second-largest economy for any signs of slowdown amid concerns over high debt levels.

A woman makes toys at a factory in Ganyu, in China's eastern Jiangsu province on June 9, 2017.

Economists in Reuters' poll forecast second quarter GDP to grow 1.7 percent from a quarter ago. That was matched by Monday's data.

The Shanghai Composite was down 1.11 percent 10:09 a.m. SIN/HK while the Shenzhen Composite was down 2.57 percent, recovering some from earlier losses.

China also reported January to June fixed asset investment rising 8.6 percent on year (topping a Reuters poll of 8.5 percent growth) while property investment rose 8.5 percent in the same period.

Retail sales meanwhile rose 11.0 percent in June from a year ago, better than Reuters' forecast of 10.6 percent.

Beijing has set a growth target of around 6.5 percent for 2017, a tad lower from 6.7 percent in 2016, which was the country's lowest rate in 26 years.

With two quarters of GDP expansion at 6.9 percent against a lower full-year target, the Chinese government will now have greater tolerance of slower growth in the second half of the year, said Aidan Yao, emerging Asia economist at AXA Investment Managers.

"What's really driving the deceleration expectation of ours are government policies," said Yao.

He cited tightening policies in the property market and the government's deleveraging campaign which may affect the second half of the year, he added.

Despite concerns of the fallout from risks in the financial system, analysts say stability is the word of the day ahead of a once-every-five-years Communist Party Congress coming in the fall when a leadership shuffle is expected.

"This time a year ago, things were a bit dicey with concerns about a growth slowdown and pressure on capital outflows and the currency, but as we expected in the lead-up to party congress, stability has reigned. Growth momentum has stayed pretty high and the authorities have really tamped down the pressures on the capital outflow," said Stephen Schwartz, head of Asia-Pacific sovereign ratings at Fitch.

The ratings agency on Friday maintained its A+ rating on China with a stable outlook.

Its forecast for China GDP growth this year is 6.5 percent, with upside risk due to strong growth and exports.