China's economy rebounds with 6.9% growth in 2017

No longer a fun ride

No longer a fun ride

The expectations for China's economy in the coming 12 months have improved again, German economic research institute Center for European Economic Research (ZEW) reported.

BEIJING-China's economic growth accelerated for the first time in seven years in 2017, confounding expectations among economists and policy makers that Beijing's efforts to cut corporate indebtedness, cool the property market and curb pollution would slow growth.

But the government might choose to sacrifice needed reforms in order to uphold popular economic growth targets, wrote analysts Max Zenglein and Maximilian Kaernfelt of the Merics Institute in Berlin.

"China's target for 2018 is around 6.5 percent".

The National Bureau of Statistics announced Thursday that the economy expanded 6.9 percent previous year, up slightly from 6.7 percent in 2016 and breaking a trend of gradual slowing that began in 2011. "It is nearly like an expectation anchor for the whole economy", Gruenwald told a forum in Hong Kong on Thursday, the same day China reported a 6.9 per cent expansion in GDP for 2017.

While the income gap between urban and rural households was still large - 36,396 yuan ($5,667) in cities and 13,432 yuan ($2,091) in rural areas - despite rural incomes rising at a slightly larger rate in 2017. "It will be surprising if Q4 growth turns out to be 6.9 per cent", said Li Huiyong, an economist at Shenwan Hongyuan Securities in Shanghai.

GDP totaled 82.7 trillion yuan (about 13 trillion USA dollars) in 2017, up from around 41.3 trillion yuan in 2010, when China first overtook Japan.

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She said: "We're not out of the woods yet: high levels of debt can still affect China's growth further down the line".

An economist at Enodo Economics in London, Diana Choyleva also obtained growth figures that are lower than the official results.

Economists say growth momentum in the economy is likely to weaken this year as firms face higher borrowing costs, the government tries to rein in credit and policymakers step up a war on pollution that has hurt the industrial sector in many parts of the country.

"The decline in December retail sales growth is mainly due to slowing auto sales last month".

"The priority this year is to control risks, especially financial risks".

"The acceleration added to evidence that the economy passed a turning point in 2016 and continued upward on the back of industrial and consumption upgrades", Wang said.

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