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Fast Comment ChinaStable economic growth

  1. GDP growth reported at 6.8 percent y-o-y in Q4
  2. Sharp decline in retail sales growth in December
  3. Gradual growth slowdown ahead
GDP growth reported at 6.8 percent y-o-y in Q4
GDP grew by a higher-than-expected 6.8 percent y-o-y in Q4, unchanged from Q3. However, on a quarterly basis, growth actual slowed from an upwardly revised 1.8% q-o-q in Q3 to 1.6 percent in Q4. As usual, the two measures do not fully correspond, as emphasised by the fact that there were no revisions to the annual growth rate in Q3 despite the quarterly revision. It still seems to be the case that the annual growth rate, which is the most commonly watched measure, is remarkably stable and perhaps ‘smoothed’ intentionally.
Sharp decline in retail sales growth in December
The monthly activity indicators for December showed a mixed picture of the current momentum. Retail sales growth dropped sharply whereas industrial production growth increased slightly despite expectations of unchanged growth. Fixed investments were in line with expectations.
Gradual growth slowdown ahead
GDP growth for 2017 as a whole ended at 6.9 percent, up from 6.7 percent in 2016. However, the rebound primarily took place in the first half of 2017 and the trend of most other indicators has been slightly downward in the second half. We expect growth to continue to slow gradually ahead. The construction boom is very likely over due to the many measures taken by the authorities to avoid speculation and dampen the lively housing markets. The authorities are also eager to dampen overall credit growth and, in particular, shadow banking activity. This, along with measures to combat air pollution, will inevitably weigh on economic growth ahead.

Disclaimer

Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

bjro03@handelsbanken.dk

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