China ETFs In Focus As GDP Beats Expectations

China’s economy grew faster than expected in the fourth quarter of 2017, official data showed. An export-led recovery helped alleviate concerns over a crackdown on pollution intensive industries and credit concerns weighing on growth in the world’s second largest economy.

Economic Scenario

China’s National Bureau of Statistics said that the country’s GDP grew 6.8% year over year in the fourth quarter, unchanged from the second quarter. Although the Chinese government has been facing challenges of curbing property market speculation and high debt, the recent economic data is welcome news for policymakers. However, the economy grew 6.9% in 2017 compared with 6.7% in the previous year, the first annual acceleration since 2010, and way above the government’s full-year target of 6.5%.

China’s consumer prices increased 1.8% year over year in December compared with 1.7% in November. However, it came in below Bloomberg’s expectations of 1.9%, per the National Bureau of Statistics (NBS). It is still way behind China’s target of 3% (read: China ETFs in Focus as Inflation Misses Expectations).

China’s industrial output increased 6.6% year over year in 2017 compared with 6% in the previous period. However, fixed asset investment and retail sales slowed, as they grew 7.2% and 10.2% year over year in 2017, respectively, compared with 6.3% and 10.0% in the previous period.

Risks Involved

In the Congress meet in late 2017, policymakers hinted at their shift of agenda toward a crackdown on pollution and financial risks from economic growth at any cost. Per a BBC article citing IMF data, China debt has reached 234% of total output, a sure red flag.

While the IMF suggests that China focus more on its financial system over growth, many analysts even argue that the country’s official data is anybody’s guess and cannot be completely trusted. Recently, governments of Inner Mongolia and city of Tianjin admitted that their 2016 economic numbers were overstated.

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