China’s Economy Grew More Than Thought In Q4, But The Party Won’t Last Long

Thanks in part to increased spending on the part of the government and record lending from banks, China’s economy grew more than the 6.8 percent expected in the fourth quarter.

According to a report by Reuters, the fourth quarter marked the first time in 24 months that the second-largest economy in the world reported an increase in growth, but it may not be long-lasting. The Chinese economy will face pressures in 2017, including a cooling off of the housing market, the results of structural reforms by the government and the potential to have a less-than-friendly relationship with Trump’s administration in the U.S.

“We do not expect this (Q4 GDP) rebound to extend far into 2017, when a slowdown in the property market and steps to address supply shortages in the commodity sector ought to drag again on demand and output,” said Tom Rafferty, regional China manager for the Economist Intelligence Unit, in the Reuters report.

In 2016, China’s economy expanded to 6.7 percent. Economists polled by Reuters had expected 6.7 percent growth for the fourth quarter, as well as for all of 2016. Reuters noted that the housing market helped the economic growth in the country during the fourth quarter, with property investments increasing 11.1 percent in December from 5.7 percent in November. Consumers were also in the mood to spend with consumer spending lodging strong growth in December.

On the negative side, Reuters said fixed-asset investments increased 8.1 percent, which was the slowest pace seen since 1999, driven by a slowdown in investments on the part of private firms. Private sector fixed-asset investments declined to 4.07 percent from 4.93 percent in November, reported Reuters. Policy sources told Reuters the leaders of China plan to lower the economic growth target for 2017 to 6.5 percent to provide more room for reforms.


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