Growth slows but still hits the target
Print Edition
CHINA’S GDP increased by 6.7 percent last year with growth in the fourth quarter stronger than expected at 6.8 percent, the National Bureau of Statistics said yesterday.
Though the annual growth of 6.7 percent was the slowest in 26 years, it was in line with the official target and market expectations.
The services sector led growth with an increase of 7.8 percent, outpacing the industrial sector’s 6.1 percent and the agricultural industries’ 3.3 percent.
Services made up a record 51.6 percent of the country’s 74.41 trillion yuan (US$10.82 trillion) GDP, up 1.4 percentage points from a year ago.
Industrial output expanded 6 percent year on year in 2016, largely due to strong performance in the high-tech industry, the bureau’s figures showed.
“Generally speaking, the economy was running within a reasonable range, the quality and efficiency of the economic growth improving, and new momentum growing,” bureau head Ning Jizhe said yesterday. “These are the main signs of the obvious characteristics of the new normal.”
HSBC economist Julia Wang said that the economy had finished strongly but challenges remained.
“2016 fourth-quarter GDP came in better than expected,” she said. “Reflation continued as nominal GDP growth recovered to a three-year high of 9.9 percent year on year on the back of infrastructure investment and the property market.”
But she said the housing market is set to slow this year under the government’s tightening policies, and the key challenge for policy-makers is to revive private business investment, which rose just 3.2 percent, lagging overall fixed-asset investment growth of 8.1 percent.
HSBC forecast that GDP would hit 6.5 percent this year.
Zhu Haibin, JP Morgan’s chief China economist, said the economy will be under pressure from weakness in the real estate and auto sectors this year while the US-China relationship is arguably the biggest external uncertainty for China, including bilateral issues as well as the rising wave of protectionism.
“Monetary policy faces a trade-off between growth, inflation, financial risks and capital outflow pressures,” Zhu said. “Maneuvering room for monetary policy is limited, and we expect the current neutral policy will continue in the near term, with a combination of stable policy rates and credit growth, tighter macro-prudential measures and a defensive foreign exchange policy.”
The bureau’s figures showed that the Consumer Price Index, a main gauge of consumer inflation, was up 2 percent last year, warming up from a six-year low of 1.6 percent in 2015.
The Producer Price Index, a measure of factory-gate inflation, fell 2 percent year on year.
Zhu said he expected PPI inflation to average about 5 percent in 2017.
Average CPI inflation should rise to just below 2.5 percent, Zhu added.
The bureau’s figures showed retail sales up 10.4 percent year on year, slightly lower than the 10.7 percent increase in 2015.
Online sales of real goods rose 25.6 percent to 4.19 trillion yuan, amounting to 12.6 percent of total retail sales. That was 1.8 percentage points higher than 2015.
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