* China cbank gov sees 7 pct growth in H2, stronger than expected
* Rising household consumption behind GDP growth - Zhou
* China retail sales have been growing above 10 pct since March
* Economy is surprising markets with resilience
* Higher borrowing costs, housing curbs still seen dragging eventually
SHANGHAI/BEIJING, Oct 16 (Reuters) - China's economy is expected to grow 7 percent in the second half of this year, the central bank governor said, accelerating from the first six months and defying widespread expectations for a slowdown.
While China produced forecast-beating growth of 6.9 percent in the first half, many economists and investors had expected its momentum would start to fade in the latter part of the year.
Those views of a slowdown have been largely predicated on three factors: higher borrowing costs; increasing curbs on home buying to cool soaring prices; and government-mandated shutdowns of many steel mills and other industrial plants in coming months to reduce winter air pollution.
But the driving force behind growth has been mainly rising household consumption, Governor Zhou Xiaochuan said in remarks published on the People's Bank of China's (PBOC) website on Monday.
"China's economic growth has slowed over the past few years...but economic growth has rebounded this year, with GDP reaching 6.9 percent in the first half, and may achieve 7 percent in the second half," Zhou was quoted as saying at the G30 International Banking Seminar in Washington on Sunday.
Zhou's uncharacteristically explicit growth forecast came just days ahead of the start of the twice-in-a-decade Communist Party congress where President Xi Jinping is expected to strengthen his grip on power in a major party leadership reshuffle.
Investors are waiting to see if hearty and sustained economic growth this year gives China's leaders the confidence to quicken their reform push in the next five years.
The government had set a 2017 GDP growth target of around 6.5 percent. Zhou's estimate implies a full-year expansion of about 6.95 percent, topping the annual growth rates in 2015-2016.
Economists had widely expected growth to ease marginally to 6.8 percent in the third quarter and cool further to around 6.6 percent in the fourth quarter, but the impact of the pollution shutdowns is a major wild card.
China is in the midst of publishing September data, culminating in its third-quarter gross domestic product number on Thursday.
FIRING ON ALL CYLINDERS?
China's imports rose by a stronger-than-expected 18.7 percent in September, with iron ore volumes hitting a record, data showed on Friday. Exports picked up to a three-month high, signalling robust demand at home and abroad.
Another surprise for markets followed early on Monday, when data showed producer prices jumped 6.9 percent in September from a year earlier, confounding expectations that price gains had peaked.
A year-long construction boom has helped boost prices for building materials from steel to copper pipes, giving China's long-ailing industrial sector its best profits in years.
Prices have turned even more volatile in recent weeks as the government embarks on its biggest environmental crackdown yet to reduce the country's notorious winter smog.
Some steel mills, smelters and coal companies have cranked up production ahead of expected official curbs on output or outright shutdowns in coming months. Environmental inspections have disrupted some supply lines and added to uncertainty in the market.
Shanghai steel futures surged nearly 7 percent on Friday, spurring a similar rally in raw materials iron ore and coking coal.
Activity data to be released along with the GDP readings on Thursday are expected to reinforce the view that China is still running in high gear.
Fixed-asset investment is predicted to have increased 7.7 percent in the first three quarters on-year, only slightly softer than a 7.8 percent rise in January-August.
Retail sales growth is seen edging up to 10.2 percent in September, sustaining a monthly rate of expansion of more than 10 percent since March.
Private manufacturing and service sector surveys, however, suggest that large state-run firms are reaping more of the benefits from robust growth than smaller, private companies, while a recent Reuters analysis showed few of China's listed companies are using windfall profits this year to reduce massive debts.
Also over the weekend, Zhou said China remains confident in its ability to fend off systemic risks in the economy and keep its fundamentals healthy and stable.
Risks in so-called shadow banking in China have somewhat eased, while non-performing loans are still at a relatively low level, the central bank said.
Chinese authorities are trying to walk a fine line by containing riskier types of financing and slowing an explosive build-up in debt without stunting economic growth.
For the first time this year, banks were required to start reporting off-balance sheet wealth management products to the central bank every quarter to give authorities a better sense of potential risks to the financial system.
But authorities have also frequently kept the system well supplied with cash to avoid interest rates spiking too rapidly, which could slam the brakes on growth.
Data at the weekend showed Chinese banks extended more loans than expected in September, buoyed by demand from home buyers and companies.
Both China's bank lending and total social financing, a broad measure of credit and liquidity, look set to hit another record high this year.
(Reporting by Brenda Goh and Ryan Woo; Editing by Sam Holmes and Kim Coghill)