China’s economy grew 6.9% last year the fastest since 2015 even as the government cracked down on excessive debt growth, cut surplus capacity in some industries and curbed production of steel and coal-fired electricity to cut pollution.
Year on year growth rate for the fourth quarter was 6.8% which locked in China’s first yearly gross domestic product acceleration since 2010. The annual figure also topped the government’s full year target of “around 6.5%”. The 2018 target will be released in March by the government.
The 6.8% rate in the final quarter and annual rate of 6.9% were above market forecasts, which led to the usual western ‘experts’ (such as the New York Times) to suggest the figures were too high.
For example the New York Times wrote (https://www.nytimes.com/2018/01/18/business/china-gdp-economy-growth.html
China’s Economic Growth Looks Strong. Maybe Too Strong.
www.nytimes.com
The country reported higher annual growth, but implausibly smooth numbers prompt experts to look for other ways to assess the world’s No. 2 economy.
"In reality, the pace of growth in China’s economy is anybody’s guess. Various signals suggest China’s growth did speed up last year, which could give the government the room it needs to tackle an accumulation of serious financial, environmental and social problems this year.
"But measuring the size and health of the world’s second-largest economy can be difficult at best. Its official figures have become implausibly smooth and steady, even as other countries post results with plenty of peaks and valleys. Officials in far-flung regions are admitting their numbers are wrong.
“And outside experts crunching the data have come up with different — and usually weaker — results.”
But Bloomberg took another tack:
“"The economy is cruising along at impressive speed, breezing past potential speed bumps with apparent ease," said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong.
"If China keeps up its current speed, the next stop will be inflation. Some cooling of growth momentum at the start of 2018 would thus be welcome to curtail price pressures."
GDP in the fourth quarter grew 1.6% quarter-on-quarter, compared with revised growth of 1.8% in July-September, China’s National Bureau of Statistics said.
Growth in fixed asset investment, much of it government-directed, fell to the slowest pace since 1999 at 7.2% last year.
In housing, figures released Thursday showed prices rose in the most cities in six months even as the government continued its campaign to curb speculation.
New-home prices in December rose in 57 of 70 major cities tracked by the government, compared with 50 in November, the NBS said.
China’s exports and imports growth slowed in December after surging in the month before, adding to signs of ebbing economic momentum.
The slowdown in import growth may have something to do with Chinese New Year falling in mid February, which is later than usual. Import figures usually surge in the month before New Year – so the market will be looking at January to see if there is a blip.
China’s bank lending halved in December as the government kept up its campaign to curb financial system risks, but banks still managed to lend out a record amount for the year amid the tighter scrutiny.
Reuters said “The surprise is that policymakers achieved this goal (of strong growth) while also engineering a significant slowdown in credit growth, after years in which economists have warned about risks building from years of aggressive credit stimulus.
“China’s ratio of debt to GDP fell for the first time since 2011 in the first half by some estimates."
“But analysts warn that the trade-off between growth and de-leveraging will get tougher this year, with a slowing property market and tighter controls on local-government infrastructure spending expected to drag on the economy.
“They also note that the lagging impact of strong credit growth in 2016 boosted growth last year, while last year’s tightening will have the opposite effect this year,” Reuters reported.
