Wednesday, 20 June, 2018

China heads for first full-year GDP acceleration since 2010

China's economy had a pretty great 2017 but this year could be tougher VCG VCG via Getty Images
Nellie Chapman | 18 January, 2018, 13:32

Retail sales increased by 10.2 per cent in 2017 year-on-year, down from 10.4 per cent in 2016, the NBS said.

The 7.5 per cent increase is nearly double the rate in the previous year, although the total figure of 16.47 trillion yuan (USD 2.56 trillion) is within Beijing's target of below 18.82 trillion yuan.

"Debt is the biggest risk China faces right now", said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

Growth for the 2017 full year picked up to 6.9 per cent year-on-year, the first annual acceleration for the economy since 2010.

"The Chinese economy seems to have ended 2017 on a stronger footing than we initially expected", Yao Wei, chief China economist at Societe Generale SA in Paris, wrote in a note this month.

China has reported its first rise in annual growth since 2010 - seemingly benefiting from growing demand overseas as the world economic recovery gathers pace.

China, for its part, will keep its target for economic growth at "around 6.5 percent" in 2018, unchanged from a year ago, Reuters reported earlier in January, citing unnamed policy sources.

The official growth figures released on Thursday are welcome news for Beijing policy makers who are looking to cut debt and pollution in older industries without stunting growth in the world's second-largest economy. The rise in fixed-asset investment, a closely watched indicator of construction activity, matched the economist survey's forecast for a 7.2% gain.

Gross domestic product growth in the fourth quarter matched the 6.8% pace of the previous three months, while for the whole of 2017, the economy expanded 6.9%.

Projections for this year's expansion have been rising too, and are now at 6.4 per cent.

While China's leaders vowed to tackle local government debt during a major economic planning meeting in December, they also called for reasonable credit growth in 2018.

The International Monetary Fund has also recently warned of risks stemming from China's ballooning debt, saying that each extra dollar of debt is producing diminishing returns for China's economy.

Meanwhile, China's bank lending halved in December as the government kept up its campaign to curb financial system risks, but banks still managed to dole out a record amount for the year amid the tighter scrutiny.

Some economists believe the GDP numbers could be much weaker than the official figures suggest.