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back to index backCHINAtalk January,  2017


Chinese growth slips to slowest pace for 26 years

With fears about the Trump presidency, rising debt levels and an unwinding property boom, the world’s No 2 economy is set for an uncertain 2017.

China’s economy slowed further last year to expand at its weakest pace for quarter of a century, with warnings that it risks losing further momentum in 2017 as Donald Trump’s presidency creates new challenges for the trading superpower.

The world’s second-largest economy grew 6.7% last year, according to China’s statistics office, meeting Beijing’s target range of 6.5-7% but the slowest growth since 1990.

Figures for the final quarter of 2016 alone pointed to a small pick-up in pace at the close of the year. They showed GDP growth quickened to 6.8% for October-December, the first quarterly acceleration for two years and ahead of economists’ forecasts for growth to hold at 6.7%.

But news that the fourth-quarter performance was bolstered by higher government spending and record bank lending fanned fears about China’s rising debt levels. Economists fear that debt could rise further this year if the government continues to inject stimulus into the economy to meet its growth targets regardless of a changing global economy.

After another year of heady credit expansion, we estimate that China’s total non-financial debt is approaching 270% of GDP, up from 250% at end-2015. If Beijing wants to keep GDP growth above the arbitrary 6.5%, we could see a ratio of 300% of GDP by the end of 2019,” said Wei Yao, economist at Société Générale, referring to lending that is not from one bank to another.

Forecasters see the outlook for global growth as particularly uncertain, with a change of administration in the US, key elections in the eurozone, the UK embarking on Brexit negotiations and US interest rate rises all having repercussions for indebted emerging market economies. With China still struggling to rebalance its economy away from a reliance on manufacturing and exports, any slowdown in global trade will be keenly felt in the country.

To read entire article, please click here.

Source: The Guardian - GAI





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