China economy beat expectations in 2017; Survey

BEIJING: China’s economy exceeded Beijing’s annual growth target in 2017, analysts said in an AFP survey, overcoming the government’s battles against massive debt and pollution-spewing factories.

The world’s second largest economy expanded 6.8 percent in 2017, much better than the official target of around 6.5 percent, according to the poll of 11 financial experts. The reading is also an improvement on the 6.7 percent seen the previous year, which marked its worst performance in a quarter of a century. Premier Li Keqiang last week said he expected growth to have come in “around 6.9 percent”. However, the forecast comes as fresh questions were raised about the veracity of the government’s data after an area in the northern municipality of Tianjin became the latest place to be found to have inflated its own readings. The government statistics bureau will release its official figures tomorrow.

“China’s economic growth beat market expectations in 2017,” JP Morgan Chase economist Shaoyu Guo told AFP. Guo noted that expansion in the first three quarters of the year were “led by infrastructure and real estate investment, and supported by solid consumption and improved external demand”. Trade continued to be a major driver of growth as data last week showed exports and imports jumped in 2017, thanks to a pick-up in the global economy with the crucial US and European markets seeing strong recoveries.

The improvement at home comes in spite of government efforts to reduce the country’s substantial debt and to combat its persistent pollution problems, which were both expected to curb GDP growth.

Positive surprises

The economy eased slightly in the last quarter to 6.7 percent, the analysts said, from 6.8 percent in the three months prior. “October-November data showed moderation in the manufacturing sector,” Guo said, “partly reflecting stricter implementation of environmental protection policies going into the winter months.”

Analysts said while policymakers are expected to focus on deleveraging in 2018, last year showed unexpected gains despite debt reduction efforts. “In terms of China (on a macro level), 2017 was-again-full of surprises, but the good news is that most of them are positive,” Larry Hu, the Macquarie Group’s head of China economics, said in a report this month.

Wei Yao, chief China economist at Societe Generale, predicted continued favorable gains this year.

“The Chinese economy seems to have ended 2017 on a strong footing and this momentum, especially the part fuelled by external demand, may carry on well into 2018,” Wei told AFP. “We expect decent export growth to continue in the coming months, and there may well be upside surprises in light of continuing strong data from all the major economies.”

Analysts predicted, however, that the housing market would see increasingly slow sales, with Hu saying that how the government addresses property taxes “is the key thing to watch over the next couple of years”.