Sat, Jan 21, 2017 - Page 10 News List

Chinese economic growth slows to 6.7%

UNCERTAINTY:It was the worst reading for China since 1990, fueling concern over its outlook as Trump accuses it of unfair trade practices and currency manipulation

AFP, BEIJING

A woman comforts a child near replicas of gold bars at a shopping mall in Beijing on Wednesday.

Photo: AP

China’s economy grew last year at its slowest rate in more than a quarter-century, but while yesterday’s data pointed to much-needed stability, Beijing is bracing for an uncertain outlook that could see a trade stand-off with US President Donald Trump.

After a tumultuous start last year, Chinese leaders managed to steer the world’s No. 2 economy with further stimulus to hit their annual target and even record the first quarterly pickup in two years.

The economy grew 6.7 percent last year, in line with forecasts in an Agence-France Presse survey, but down from 6.9 percent in 2015, and the worst reading since 1990.

The government’s target was growth of 6.5 to 7 percent.

The October-December increase of 6.8 percent also marked the first quarterly improvement since the final three months of 2014.

China’s National Bureau of Statistics called the figure a “good start” for the government’s goal of achieving 6.5 percent annual growth through 2020.

“China’s economy was within a proper range with improved quality and efficiency. However, we should also be aware that the domestic and external conditions are still complicated and severe,” the bureau said in a statement.

The bureau added that the coal and steel industries had cut overcapacity, but structural reform should be the “mainline” this year, urging policymakers to focus on “fending off risks” to stability.

The positive close to the year was in contrast to the beginning, when worries about the state of the economy hammered global markets and the yuan tumbled against the US dollar.

The improvement came on the back of a property boom in the first three quarters, loose monetary policy and strong fiscal support, OCBC Bank (華僑銀行) economist Tommy Xie (謝東明) told Bloomberg News.

However, “those three factors will all wane in 2017,” he said.

There is also growing concern about the outlook as Trump takes up residence in the White House, with the tycoon having repeatedly accused Beijing of unfair trade practices and threatened to slap huge tariffs on its goods. He has also accused it of manipulating its currency.

It is clear that China’s exports to the US “will face a harsher climate” under the Trump administration, which will weigh on growth, Louis Kuijs of Oxford Economics said in a note, forecasting growth to slow to 6.3 percent next year.

Adding to uncertainty is a painful flood of money out of the country, with an expected hike in US interest rates leading investors to seek better returns, despite a series of measures aimed at stopping people removing their cash, sending the yuan to eight-year lows.

A long-running bad debt problem has also still to be addressed, with warnings from the IMF to the Bank of International Settlements that failure to do so could fan a serious financial crisis.

Other figures also released yesterday showed China’s industrial production rose 6 percent year-on-year for last month and the full year, while retail sales increased 10.9 percent in the month and 10.4 percent for last year.

Fixed-asset investment, a gauge of infrastructure spending, expanded 8.1 percent during the full year.

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