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China's Growth Edges up but 2016 Weakest Year since 1990

China's Growth Edges up but 2016 Weakest Year since 1990

Friday, 20 January 2017 03:06 AM

BEIJING (AP) — China's economic growth sank to its lowest level in three decades in 2016 as Beijing braces for a trade battle with U.S. President-elect Donald Trump.

Growth in the quarter ending in December ticked up to 6.8 percent over a year earlier, supported by government spending and a real estate boom, up from the previous quarter's 6.7 percent, government data showed Friday. Still, for the full year, growth came in at a lackluster 6.7 percent, down from 2015's 6.9 percent and the weakest since 1990's 3.9 percent.

Economists said that temporary strength was unlikely to last and the economy should cool further.

"We expect clearer signs of a renewed slowdown to emerge during the next couple of quarters," said Julian Evans-Pritchard of Capital Economics in a report.

China's economy has cooled steadily as communist leaders try to nurture domestic consumption and reduce reliance on trade and investment but trade still supports millions of jobs. Government spending and a surge in real estate sales last year helped offset a 7.7 percent plunge in exports, but analysts expect the economy to cool further.

Exports could face more pressure, raising the threat of politically dangerous job losses, if Trump goes ahead with promises to raise tariffs on Chinese goods after he takes office Friday.

In an implicit rebuke to Trump, Chinese President Xi Jinping emphatically defended free trade in a speech Tuesday at the World Economic Forum in Switzerland. He said a "trade war" would harm all countries involved.

Still, a member of the Cabinet's economic planning agency on Friday expressed confidence.

"I am hopeful that after his election, President Trump will consider the issue from the angle of mutual benefit and win-win and will develop the long-term, cooperative 'big country' relations that have been formed between China and the United States," Ning Jizhe told reporters.

Asked about the potential impact of action by Trump, Ning said China should maintain "medium to high-speed growth."

Beijing has relied on repeated infusions of credit to prevent activity from slumping too fast, prompting warnings the run-up in debt could spark a financial crisis or drag on growth.

Chinese leaders have cautioned the economic outlook is "L-shaped," meaning once the downturn ends, growth is unlikely to rebound.

Looking at quarter-on-quarter growth, the way other major economies report data, the economy cooled steadily over the course of the year despite the headline figure showing steady expansion. Growth fell to 1.7 percent in the last quarter, down from 1.8 percent in July-September and 1.9 percent in the previous quarter.

Chinese leaders say they will make the economy more competitive and productive by opening more sectors to private companies but last year's performance still relied heavily on spending by the government and state-owned industry.

Investment by government companies in factories and other fixed assets rose 18.7 percent last year over 2015, according to the National Bureau of Statistics. Investment by private companies was far weaker, growing 3.2 percent.

Real estate sales are booming, which has pushed up economic growth figures. But regulators are taking steps to cool surging housing prices and bank lending, which forecasters expect to depress this year's performance.

Retail sales growth decelerated to 9.6 percent from 2015's 10.6 percent. E-commerce, one of the brightest spots in the struggling economy, soared 26.2 percent over 2015, but that was down from the previous year's 33.3 percent expansion.

This week, the International Monetary Fund raised its China growth forecast for this year by 0.3 percentage points to 6.5 percent, citing a boost from government stimulus. But it warned rising debt increases the risk of a sharper slowdown.

The ruling Communist Party is headed this year into a twice-a-decade change of senior officials. Private sector analysts expect the party to postpone any significant policy changes until that is completed.

"We assume that in 2017, policymakers will be focused on ensuring economic growth remains relatively elevated," said Tom Rafferty of the Economist Intelligence Unit in a report. "Determined steps to address excessive debt levels in the economy are unlikely. It will probably not be until 2018, when politics are more favorably aligned, that we begin to see a more radical approach in this area."

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China's economic growth sank to its lowest level in three decades in 2016 as Beijing braces for a trade battle with U.S. President-elect Donald Trump.Growth in the quarter ending in December ticked up to 6.8 percent over a year earlier, supported by government spending and...
AS,China,Economy
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2017-06-20
Friday, 20 January 2017 03:06 AM
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