China’s gross domestic product (GDP) growth for 2016 is reported at 6.7%, down from 6.9% the previous year and the lowest figure since 1990 although in line with the government’s target of 6.5%-7%.
The National Bureau of Statistics (NBS) reported that in the fourth quarter of 2016 growth edged up to 6.8%, helped by higher government spending and record bank lending. With the data easing fears that the economy was heading for a “hard landing” China’s leaders will lower their economic growth target for 2017 to around 6.5% according to reports, giving them greater scope for reforms to contain debt risks.
Addressing suggestions by reporters that China has inflated the figures for several years and actual economic growth is much lower, the director of the NBS stressed that the national data was “truthful and reliable”.
Ning Jizhe added that “statistics departments on various levels will also be strengthening the law enforcement, supervision, and checks on figures” and “resolutely guarding and preventing” the fabricating of data.
The Q4 2016 figure of 6.8% was the first time in two years that economic growth had moved higher and was helped by strong data for property investment and consumer spending. “We do not expect this rebound to extend far into 2017, when a slowdown in the property market and steps to address supply shortages in the commodity sector ought to drag again on demand and output,” said Tom Rafferty, regional China manager for the Economist Intelligence Unit (EIU).
In addition, China’s exports could be impacted this year if incoming US president Donal Trump follows up on his election campaign pledges to introduce tough protectionist measures and impose tariffs on Chinese goods.
China’s debt to GDP ratio has also increased, rising to 277% at the end of 2016 from 254% the previous year, with an increasing share of new credit being used to pay debt servicing costs, according to a note by analysts at UBS analysts.
The NBS described the data as a “good start” for the Chinese government’s goal of maintaining annual growth at 6.5%-plus through to 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,” it commented.
The strong close to the year contrasted with early 2016, when worries about the state of the economy led to a sell-off on Chinese stock markets that spread globally and the yuan (CNY) fell sharply against the US dollar.
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