The Strategist

Chinese economy in 2017 grew better than expected

01/18/2018 - 13:48

Preliminary data of the PRC government shows that the country's economy as a result of 2017 grew to 6.9%. Both the Chinese government and the experts of the International Monetary Fund (IMF) forecast that this indicator was lower - about 6.5%.

By the end of 2017, China's GDP growth rate was by several percentage points higher than the country's own forecast. According to preliminary data, China's GDP in 2017 was 82.72 trillion yuan (about $ 12.72 trillion), which is 6.9% more than in 2016. At the same time, at the beginning of last year, the PRC government set the expected growth benchmark at 6.5% and above. The current figure also turned out to be better than the IMF’s expectations, which in October last year raised the forecast for the growth of the Chinese economy for 2017-2018 to 6.8% and 6.5% respectively. In fact, China's annual GDP growth in the first quarter of 2017 was 6.9%, in the second quarter - 6.9%, in the third - 6.8%, in the fourth - 6.8%.

The relatively negative outlook for the Chinese government can be explained by the fact that by the end of 2016 the growth of the country's economy had slowed to 6.7% against 6.9% per annum earlier. This indicator has become the worst for the past 26 years, but coincided with the official forecasts of the authorities, voiced in early 2016.
According to the Chinese government, the slower pace of economic growth in the country is a "new norm", which implies qualitative, intensive development instead of extensive development.

As follows from the governmental report on the results of 2017, last year "the national economy has maintained a stable and healthy development trend and exceeded expectations due to the decisive measures taken to ensure a sure victory in building a moderately prosperous society".
Inflation in China totalled 1.6% in 2017. This is significantly lower than the official forecast of 3%, while the producer price index for the first time in five years showed a positive trend and increased by 6.3% compared to the previous year, when the index fell on 2,4%. Industrial production in 2017 grew by 6.6% compared with 2016.
Investments in fixed assets increased by 7.2% against 8.1% and amounted to 63.16 trillion yuan (about $ 9.8 trillion). The share of investments of state-owned enterprises grew by 10.1%, and the private sector - by 6% compared to 2016. Retail sales jumped by 10.2% to 36.62 trillion yuan ($ 5.68 trillion), while online retail sales grew 32.2% to 7.17 trillion yuan ($ 1.11 trillion).


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