China’s economic results for 2016 were released. China’s gross domestic product (GDP) totaled 74.4 trillion yuan, representing a year-on-year growth of 6.7 percent, the fastest growth in the world. Quality and benefit of economic growth were improved, new kinetic energy saw accelerating development and characteristics of new normal were more obvious.
GDP growth rate ranks NO.1 in the world
The GDP totaled 74.4127 trillion yuan in 2016, up by 6.7 percent from a year earlier, according to data released by National Bureau of Statistics (NBS) on Jan. 20.
Based on the prediction in World Economic Outlook recently released by International Monetary Fund (IMF), India’s economy grew by 6.6 percent in last year, which means China still posted the fastest economic growth in the world.
“The economic aggregate of China, which is the world’s second largest economy, has reached 11 trillion US dollars. Growth with every each percentage point will contribute a lot, so it is quite rare and commendable that China’s economy grew at a medium and high pace particularly with optimization in economic structure, change in development model and growth in new kinetic energy.” according to Ning Jizhe, head of the NBS and deputy director of the National Development and Reform Commission.
The economic growth was very steady for the whole year of 2016. It kept stable at 6.7 percent in the first three quarters and speeded up to 6.8 percent in the fourth quarter. Although it increased by 0.1 percentage point in the fourth quarter, this is the first time for the GPD growth to pick up over the past 10 quarters.
“The economy grew stably last year on the whole and the trend with stability became clearer since the third quarter.” Lian Ping, chief economist from Bank of Communications, said to journalist of SSN in an interview.
The recovery in major macro-economic indicators in last December also proved the trend of economic stability. According to data, yuan-denominated exports saw positive growth in December 2016; during January and December, growth in real estate investment picked up significantly by 1.1 percentage points to 6.9 percent, and growth in manufacturing investment and private investment kept recovering for four consecutive months.
Zhuang Jinliang, economic analyst from China Zheshang Bank, said to the journalist that the steady growth at medium and high pace indicates that China’s economy is becoming stronger in offsetting external impact, positive factors for operation of national economy are accumulating now and downward pressure is being relieved gradually. The overall economic trend turns better. With seeking improvement in stability, China’s economy is able to keep robust.
New kinetic energy grows faster
Characteristics of new normal of China’s economy are getting more obvious.
Data shows that the service sector accounted for 51.6 percent in GDP in 2016, up by 1.4 percentage points from 2015. Contribution rate of consumption to economic growth recorded 64.6 percent, continuing to play as the biggest driver for economic growth. Hi-tech industry grew at 10.8 percent with growth rate faster than that in 2015, and its proportion in industries above designed size rose gradually.
Ning stressed at a news conference held by the Information Office of the State Council yesterday that “economy running at a reasonable range, improvement in quality and benefit of economic growth and development in new kinetic energy are the major symbols signaling that characteristics of new normal became more prominent last year”.
Noticeably, supply-side reform also gained outstanding effect. According to statistics from NBS, iron & steel and coal industries accomplished de-capacity task for 2016; inventory level of commercial residential buildings kept declining and areas of commercial residential buildings for sales reduced by 23.14 million square meters at the end of December from a year earlier; debt to assets ratio and costs of industrial enterprises both fell.
“Positive economic factors are accumulating along with supply-side reform taking effect. Particularly, de-capacity brought positive effect to industrial operation. PPI kept recovering and enterprises’ earning performance turned better.” said Lian.
In the opinion of Lian, the rebound in price of resource products in upstream industry has transferred to midstream industry. So prices in downstream industry are expected to pick up this year. “This can help arouse the enthusiasm of enterprises to make investment.”
Economic improvement with stability
When looking into the future, analyzing institutions all make the same estimation on economic trend this year that the economy will continue to stay stable at the bottom. National think tank like Chinese Academy of Social Sciences, State Information Center and Renmin University of China all predict that the economy will grow at about 6.5 percent this year.
Yan Yan, deputy head of Institute of Economic Research of Renmin University of China, remarked that China’s economy developed with an L-shaped trend in 2016 and will continue to be at the bottom this year. Macro-economy is likely to recover in 2018.
Yan also indicated that under the background with stable fundamentals, supply-side reform will be deepened continuously, which will exert bigger influence on quality improvement in economic growth on the whole.
China Merchants Securities also pointed out in a report that although economic growth dropped last year, positive factors increased, structural reform speeded up, monetary policy become more conservative, demand picked up, and enterprises’ profits maintained positive growth. This change is conducive to drive capital to flow back to real economy, laying foundation for economic recovery.
Economic growth with stability and focusing more on quality mean that macro-policy will lay emphasis on risk prevention and reform promotion, which were highlighted at the Central Economic Working Conference.
In the opinion of Yan, the focus of macro-policy has been shifted from stable economic growth in the past to risk prevention. “China’s economy will be faced with pressure from de-bubble and de-leverage, so preventing risk may be the work focus for the whole year in 2017.”
Translated by Vanessa
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