China’s pace of economic growth is on a remarkably steady run.
For the past three quarters, the world’s second largest economy has grown at exactly the same rate — 6.7%. Economists polled by CNNMoney expect China to make it four in a row when it reports fourth quarter data on Friday.
The stability of the numbers has been “uncanny,” analysts at Capital Economics wrote in a research note this month.
Doubts about the accuracy of Chinese economic statistics have been around for years and were compounded this week when the governor of a major industrial province admitted officials there had been falsely inflating data for years.
China’s growth for the whole year is, naturally, forecast to hit 6.7% as well. The figure happens to fall right in the middle of the 6.5% to 7% range China set for itself at the start of 2016.
It’ll be the slowest pace at which China’s economy has grown in more than 25 years, slightly below the 6.9% it clocked in 2015. But it’s a lot stronger than some doom-mongers had predicted at the start of last year, when fears of a sudden collapse in Chinese growth sent global markets into a tailspin.
The Chinese government nonetheless had to resort to a heavy dose of stimulus to keep the economy chugging along in 2016. Public investment in infrastructure skyrocketed and bank lending soared despite repeated warnings about the country’s worryingly high level of corporate debt.
Economists say that approach isn’t sustainable. They expect growth to slow further to 6.5% next year.
Chinese officials are also contending with a multiplying number of challenges.
Their moves to cool down overheating property markets in major cities are expected to put a dent in growth, as is a slowdown in car sales. China’s central bank, meanwhile, is burning through hundreds of billions of dollars as it tries to prop up the yuan, which is under pressure from huge sums of money flowing out of the economy.
And then there’s the wild card of U.S. President-elect Donald Trump. He and his team have been talking tough on China, with threats of heavy tariffs raising fears of a trade war that would hurt both countries’ exports.
Beijing’s efforts to keep the economy growing steadily in the short term also appear to have come at the expense of taking the difficult step of overhauling key areas of its economy, like the huge but inefficient state-owned enterprises.
Experts say that such measures are crucial to ensuring the economy’s health in the long term and reducing the risks of major financial problems.
“While reform is taking place, it has been far more gradual than most expected,” said Brian Jackson, China economist at IHS Global Insight.
