Published: Thu, January 18, 2018
Economy | By Melissa Porter

China's strong economic growth blows away expectations

China's strong economic growth blows away expectations

Retail sales rose 10.2 percent in 2017 while exports jumped 10.8 percent from a year earlier despite heightened trade tensions during U.S. President Donald Trump's first year in office.

The country's Q4 GDP growth reached 6.8%, surpassing the forecast of 6.7% by economists polled by Reuters.

Separate figures have shown overall growth in credit in 2017, despite efforts to curb risky lending across the board.

Industrial output rose 6.2 percent in December from a year earlier, the National Bureau of Statistics said on Thursday, higher than analysts' estimates for a rise of 6.0 percent.

The economy is in the process of rebalancing away from the investment-heavy and export-dependent model that brought four decades of breakneck economic growth but left China heavily in debt.

It's the first time since 2010 that China's official growth rate has bested the prior year.

The official growth figures released on Thursday are welcome news for Beijing policy makers who are looking to cut debt and pollution in older industries without stunting growth in the world's second-largest economy.

Projections for this year's expansion have been rising too, and are now at 6.4 per cent.

Total sales grew 7.7 percent in the full-year of 2017, falling sharply from the 22.5 percent increase in 2016.

Still, years after China surpassed Japan as the second-largest economy, it's getting closer to knocking the USA from its perch at the top and is also playing a crucial role as a driver of global expansion.

Last year, China's gross domestic product (GDP) overshot the official government target of about 6.5 percent, accelerating from the 6.7 percent growth seen in 2016, which was the slowest for more than a quarter of a century.

But analysts warn that the trade-off between growth and a significant slowdown in credit stimulus will get tougher this year, with a slowing property market and tighter controls on local government infrastructure spending expected to drag on the economy.

Beijing traditionally has struggled to force its priorities on local governments, but has vowed to take on financial risk this year, including how local governments finance themselves. Quarterly growth is projected to decelerate slightly, though two of 49 economists project acceleration from the third-quarter pace. "I think growth will be 6.6 to 6.7 per cent", said Wang Jun, chief economist at Zhongyuan Bank in Beijing.

"We expect an opposite trend in the year ahead from last year - smaller tier-3 and tier-4 cities will cool quickly and more housing supply will go into bigger cities where demand will catch up", said JLL's Zhou.

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