The Chinese Economy: A Bullish Outlook for 2018
The World Bank raised its China 2017 economic growth forecast from a projected 6.7 percent in October to 6.8 percent in its China economic update on December 19,2017. The past year also saw the International Monetary Fund and the Asian Development Bank raising their outlook for China’s economic growth several times, which indicates global optimism about the Chinese economy.
In 2017, by deepening supply-side structural reform, China achieved impressive results in cutting industrial overcapacity, de-stocking, de-leveraging, lowering corporate costs, and bolstering areas of weakness: China’s annual targets for cutting capacity in steel and coal industries were surpassed, commercial housing for sale and corporate debt ratio continued to decrease, taxes and fees were cut by more than one trillion yuan (US$152.1 billion), and investment in weak sectors increased heavily.
The continuing reform helps the Chinese economy remain stable and generates greater momentum for growth. In 2017, the Chinese economy improved its quality and effectiveness and became more vigorous, as new businesses and new industries became stronger. These changes laid a solid groundwork for China’s long-term growth.
With its massive scale as the world’s second largest economy, China achieved steady growth in 2017 despite pressure brought by economic structure transformation and upgradation. In the first three quarters of 2017, the Chinese economy grew by 6.9 percent year-on-year, about 0.4 percentage points higher than its target. The third quarter saw China’s GDP grow by 6.8 percent. The growth rate has remained between 6.7 percent and 6.9 percent for nine consecutive quarters.
From January to November 2017, 12.8 million new urban jobs were created in China, 310,000 more than the same period in 2016. Meanwhile, the Consumer Price Index rose 1.5 percent year- on-year, within the target of about 3 percent. For the first three quarters in 2017, per capita disposable income in China rose by 7.5 percent year-on-year after deducting the price factor, which is higher than GDP growth rate.
China’s imports and exports both maintained double-digit growth, realizing a basic balance in international payments. From January to November 2017, goods trade rose by 15.6 percent compared to the same period in 2016, of which imports rose by 11.6 percent and exports 20.9 percent. China’s foreign exchange reserves exceeded US$3.1 trillion at the end of November after rising for ten straight months.
The global economic recovery since the beginning of 2017 provided a favorable external environment for China to develop its economy, while China has lived up to its reputation as the engine and stabilizer of world economic growth. The United Nations recently reported that China contributed about one third of global economic growth in 2017. Over the past five years, China has contributed over 30 percent of world economic growth, topping all other countries.
The Belt and Road Initiative proposed by China has gained extensive support from the international community. An increasing number of countries and regions are taking part in the construction of the Belt and Road to develop their own economy. Over the next 15 years, China will continue to enlarge its market. Analysts estimate that China will import goods worth US$24 trillion, absorb foreign direct investment of US$2 trillion and invest US$2 trillion abroad.
The annual Central Economic Work Conference held in Beijing from December 18 to 20, 2017 drew a blueprint for China’s economic work for 2018 based on the current economic situation. Socialism with Chinese characteristics entering a new era is heralding a new chapter for the Chinese economy as it transitions from high-speed growth to highquality development. The Chinese economy is expected to show new vitality and maintain stable growth in 2018.