China growth slows to 6.6pc

Dhaka,  Sun,  04 December 2016
Published : 17 Oct 2016, 11:10:39

China 2016 economic growth seen slowing to 6.6pc, 6.5pc in 2017: Reuters poll

China's economic growth is expected to cool to 6.6 per cent this year and slow further to 6.5 per cent in 2017, even as the government keeps up policy support to help ward off a sharper slowdown, a Reuters poll showed.

The world's second-largest economy faces nagging downward pressure due to slack global demand that has hurt its exports, as well as risks from painful reforms to cut industrial overcapacity and a growing pile of debt that some analysts fear could spark a financial crisis.

The risk of a correction in the high-flying property sector could also pose a threat as more local governments rush to restrict home purchases to cool surging house prices and ward off housing bubbles.

While fears of a hard landing appear to have eased, recent data also have highlighted growing imbalances in China's economy, with growth increasingly reliant on government spending as private investment falls to record lows.

"The downside risks to growth remain larger, though, and they can be manifested in a weaker-than-expected property sector or external demand," economists at HSBC said in a note.

"In addition, the slowdown in private sector investment over the past years means that the organic growth momentum of the economy may have declined, requiring policymakers to be more vigilant in terms of keeping policies as supportive as possible."

Last month, the World Trade Organization cut its forecast for global trade growth this year by more than a third to 1.7 per cent, reflecting a slowdown in China and falling levels of imports into the United States.

Still, the median forecast in a Reuters survey of 59 economists was slightly better than a poll in July, when economists penciled in 2016 growth of 6.5 per cent and 6.3 per cent for 2017.

In the latest poll, the highest growth forecast for 2016 was 6.8 per cent and the lowest was 6.3 per cent.

The poll also showed China's economic growth could slow to 6.6 per cent in the fourth quarter of 2016, from an expected 6.7 per cent in the third quarter.

The National Bureau of Statistics is due to release third-quarter gross domestic product (GDP) data on Oct. 19.

Premier Li Keqiang said last week that China's economy performed better than expected in the third quarter due to a rebound in factory output, company profits and investment.

A construction boom fueled by government infrastructure spending and a hot property market has boosted sales and profits for firms making building materials to furniture, though many smaller companies in unrelated sectors continue to struggle.

The government has set a growth target of 6.5-7 per cent for this year. The economy expanded 6.9 per cent in 2015, the slowest pace in a quarter of a century.

But many China watchers suspect real growth is already weaker than official data suggest.

- TM
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