China’s huge economy grew at its slowest pace in more than a quarter century last year — and 2017 is set to be even tougher.
The world’s second largest economy expanded 6.7% in 2016, according to official data released Friday, helped by a hefty dose of government stimulus.
That’s a slowdown from the 6.9% that China clocked in 2015. But it’s right in the middle of Beijing’s target range and a lot stronger than some doom-mongers had predicted at the start of last year, when fears of a sudden collapse in Chinese growth panicked global markets.
For the fourth quarter of 2016, the economy grew 6.8%, a hair faster than the 6.7% expected by most economists surveyed by CNNMoney.
The Chinese government had to pull on a series of stimulus levers 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 can’t continue indefinitely. They expect growth to slow further to 6.5% next year.
The fourth-quarter figure of 6.8% snapped a streak of three quarters of identical growth, which had added to questions about the accuracy of China’s official economic data.
“China has narrowly avoided posting four consecutive quarters of stable growth, which would have been a first for a major economy in modern times and would have further weakened the credibility of the data,” said Julian Evans-Pritchard, a China expert at Capital Economics.
That credibility already took a hit earlier this week when the governor of one of China’s major industrial provinces admitted officials there had been falsely boosting economic data for years.
Asked about that case at a news conference on Friday, national statistics chief Ning Jizhe said China was strengthening its practices for the reporting of data.
Chinese officials also face a growing burden of economic challenges at the start of 2017.
Their moves to clampdown on red-hot property markets in major cities are expected to put a dent in growth. 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 vast sums of money flowing out of the economy.
And then there’s the huge question mark over the policies of Donald Trump, who’s set to be inaugurated as U.S. president later Friday. 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.
Experts also say that China put short-term growth last year ahead of badly needed reforms of key parts of the economy, such as the country’s massive but inefficient state-owned enterprises.
— Tim Schwarz contributed to this report.
