China GDP growth improves to 6.9%

China's economy expanded by a more-than-expected 6.9 percent last year, amid the deepening of supply-side reforms, the National Bureau of Statistics said yesterday.

China’s economy expanded by a more-than-expected 6.9 percent last year, amid the deepening of supply-side reforms, the National Bureau of Statistics said yesterday.

The annual growth of GDP was above the government’s official target of 6.5 percent and marked a recovery from a 26-year low of 6.7 percent in 2016.

GDP growth in the fourth quarter was 6.8 percent, the same as the third quarter but slower than the 6.9 percent growth in the first two quarters.

The services sector led growth with an increase of 8 percent, outpacing the industrial sector’s 6.1 percent and the agricultural industries’ 3.9 percent.

Services continued to make up 51.6 percent of the country’s 82.71 trillion yuan (US$12.85 trillion) GDP.

Industrial value-added output expanded 6.6 percent year on year in 2017, up from 2016’s 6 percent led by high technology and equipment manufacturers.

“The domestic economy was steady, positive, and above expectations,” the statistics bureau said. “Economic dynamism, momentum, and potential have been released and the stability, coordination and sustainability have significantly enhanced.”

Ning Jizhe, the bureau’s head, said in a briefing that structural reforms achieved important progress last year with capacity reduction in high energy consumption industries, lower debt burden of industrial companies, and greater investment in agriculture and environment protection.

Momentum gathered in the “new economy” — referring to new skills, new products, new industries, and new business models.

Ning highlighted that 13 million new jobs were created last year, and the foreign exchange reserves rose to US$3.14 trillion.

Yesterday’s figures showed retail sales up 10.2 percent year on year, slightly lower than the 10.4 percent increase in 2016.

Fixed-asset investment rose 7.2 percent year-on-year, down 0.9 percentage points from 2016.

Specially, private investment reached 38.15 trillion yuan, up 6 percent year on year, 2.8 percentage points faster than the previous year, accounting for 60.4 percent of the total investment.

Online sales of physical goods rose 32.2 percent to 7.18 trillion yuan, amounting to 15 percent of total retail sales, 2.6 percentage points higher than 2016.

Cheng Shi, chief economist of ICBC International, attributed the faster-than-expected economic growth last year to emergence of new momentum instead of government stimulus in investment.

“The year 2017 concluded in a steady way after surprising recovery in the first half,” said Cheng. “Benefits of supply-side have been released, and macro-economic policies in the new age are expected to support and accelerate the shift from traditional industries to new momentum, creating new room for high quality development in China.”

The institute said China’s GDP growth could still reach 6.9 percent this year as a long-term recovery trend is consolidated.

Earlier data showed China’s consumer inflation was 1.6 percent last year, cooler than the 2 percent for 2016, while the factory-gate prices rose for the first time in six years. Foreign trade recorded its first expansion in three years under strong domestic and external demand.

Standard Chartered Bank forecast China’s GDP will be “moderate” this year, up to 6.5 percent, with greater emphasis on reforms in pursuit of higher quality of development.

“While the government has continuously emphasized stability in the process of moving forward, we sense a tilt in the balance toward faster reforms and increased risk-taking in 2018, which marks the 40th anniversary of the launch of China’s reform and opening up,” the bank said in a note.

The bank said potential risks to the economy include smaller property investment, lower growth and higher inflation, as well as escalating trade friction with the United States.

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