This report provides detailed information on the main economic developments in China in 2017, including the following:
1.1 Macroeconomic situation
China’s annual GDP growth has consistently slowed since 2010. It has been underpinned by a major economic transformation, which was conveyed by its leaders under Communist Party of China (CPC) General Secretary Xi Jinping during the 18th Central Committee’s Third Plenum in 2013. The term “New Normal” was adopted during the Fourth Plenum in 2014 to describe the desired shift from government stimulus and export goods towards a services-oriented and domestic consumer demand-driven economy.
Economic rebalancing has been well under way. The services sector’s share in GDP increased further to 51.6% in 2016, up +1.4 percentage points from 2015. In H1 2017, consumption accounted for 63.4% of overall economic growth. Retail sales and average per capita disposable income grew by +10.4% YoY and +7.3% YoY, respectively, during the same period.
According to the Asian Development Bank (ADB), internal demand now has a stronger positive impact on growth than exports, which looks more like a sustained development as China’s growing middle classm continues to provide a strong tailwind to domestic consumption.
In 2016, China recorded yet again its lowest annual growth rate (+6.7% YoY) since 1990. However, at +6.8% YoY in Q4 and +6.7% YoY in the preceding quarters of 2016, last year’s quarterly output data points to a clear stabilization of the economy.
Twenty sixteen also saw an end to the persisting deflationary pressures of the previous years. Although the Consumer Price Index (CPI) dropped markedly in February 2017 due to seasonal food price fluctuations, the index experienced three straight months of gains immediately afterwards and has since continued to trend upwards, approaching almost 2% in October.
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