China’s economy surprises with growth of 6.9 per cent in year Xi cemented power
China grew faster than expected during 2017, surprising analysts who had expected the gradual slowing of the world’s second-largest economy to continue.
GDP grew by 6.9 per cent over the course of the last year, the first increase in the country’s growth rate since 2010, according to government data published today. The economy grew by 1.6 per cent in the final quarter of the year.
The Chinese government targeted growth of around 6.5 per cent last year – a year in which President Xi Jinping cemented his power at the Communist party congress.
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Industrial production was one of the main drivers of growth over the year as it increased by 6.6 per cent, a 0.6 percentage point increase. However, the services sector, which is increasing to reflect an expanding middle class, grew by 8.2 per cent.
The latest figures will prompt investors to “breathe a sigh of relief”, according to Jane Sydenham, investment director at asset manager Rathbones, as fears over the unsustainable build-up of Chinese debt have not started to drag on debt.
She said: “We’re not out of the woods yet: high levels of debt can still affect China’s growth further down the line. Today’s figures indicate that the economy is still fairly robust due in good part to manufacturing exports, rather than the transition to the new consumer economy.”
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Qing Wang, a professor of marketing and innovation at Warwick Business School, warned that uneven growth is “the biggest challenge” facing the Chinese government.
“A significant number of backward regions such as the Northeast and Southwest region of China are lagging further behind without strong differential advantages,” he said, in contrast to cities like Hong Kong and Shanghai on the Pearl and Yangtze river triangles.
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