Published: Sat, January 21, 2017
Economy | By Melissa Porter

China Just Posted Its Slowest Annual Growth in 26 Years

China's GDP growth last year tanked to its lowest level in more than a quarter century at 6.7 per cent, amid a scandal that a key province in the world's second-largest economy fudged data for years and concerns over a likely trade war with the USA under Trump administration.

Nevertheless, Bloomberg economist surveys are tipping only 6.4 percent GDP growth in 2017, compared to the 6.5 percent expansion forecast by both the International Monetary Fund and the World Bank.

Last week, the head of economic planning said that the conditions have been generally stable at the start of 2017.

Fiscal revenues were inflated by at least 20% during the period, and some other economic data were also made up, the People's Daily said.

It raises doubts about whether there will be a further return to an investment-led growth model, which the Chinese government says it is trying to shift away from. Exports of China have been facing downward pressure for most of 2016 because of sluggish external demand and tougher competition from the lower-cost producers.

The latest data from China came a day after President Xi Jinping warned against a potential "trade war" while speaking at the World Economic Forum in Davos in Switzerland. The American Chamber of Commerce in China said Beijing is preparing to retaliate if Trump acts.

"I personally believe President-elect Trump will consider issues from the perspective of developing mutually beneficial bilateral ties and advance the long-lasting cooperation between the two major countries", Ning said.

An outcome that suggests China's economic transition is going well, even forgiving well documented concerns over the reliability of the data presented.

He told the Reuters news agency: "The key risk to the Chinese economy in 2017 and 2018 is the possibility that faster than expected U.S. interest rate increases could intensify Chinese capital outflows and increase stresses on China's financial system".

Auto sales also are forecast to weaken. This is within the government's targeted range of 6.5 percent to 7 percent. Despite the better-than-expected end to the year, it is still the sixth successive year that the economy has slowed and the lowest annual GDP growth recorded in 26 years. The growth was 0.1 percentage point higher than in the previous quarter.

On Friday, Beijing reported a 6.8 percent rise in gross domestic product (GDP) for the December quarter, slightly higher than the 6.7 percent median estimate predicted by a Bloomberg survey.

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