Across The Border | Chinese 2017 growth in question with the arrival of Trump, the property market cooling and currency still unsettled
Analysts warn external uncertainties and domestic structural problems weigh on 2017 outlook
China’s continued policy of prioritising short-term growth targets has worsened its structural problems, according to analysts, while growth in 2017 is facing the double challenge of second-guessing what Donald Trump might do, coupled with a cooling property market at home, according to analysts.
On Monday Fitch Ratings issued a note which examines how the country has just reported stronger-than-expected economic growth for the last quarter in 2016, up by 6.8 per cent year on year.
While the ratings agency says the figures prove the authorities’ stimulus measures had been “effective in maintaining its growth target”, it also warns of more “significant risk to medium-term macroeconomic stability”.
“The authorities’ direct fiscal expansion and quasi-fiscal stimulus channelled through state-owned enterprises (SOE) were vital to stabilising growth in 2016,” said Fitch.
It notes SOE fixed-asset investment growth surged to 19.1 per cent in 2016, up from 10.7 per cent the previous year. Outside of the SOE sector, fixed-asset investment growth slowed markedly, underlining the importance of stimulus in propping up demand.
“That also highlights,” it added, “that the economy might lack self-sustaining growth momentum”.
