China’s economy grew by 6.9 percent in 2017.
It’s the first increase in the country’s growth rate for seven years.
The figures, which were released earlier this month by The National Bureau of Statistics, surprised many analysts who expected a slowing of the world’s second-largest economy, as fears had begun to develop over the country’s build-up of debt.
Growth last year was aided from increasing exports, retail sales and the property market. Key factors, however, were an increase in industrial production, up by 6.6 percent, and the services sector, growing by 8.2 percent over the period — reflecting an expanding Chinese middle class.
But a rise in borrowing to fuel infrastructure investment has triggered downgrades of China’s debt rating by many credit rating agencies, with the International Monetary Fund (IMF) estimating that the country’s debt has now reached 234 percent of its total domestic output.
Jane Sydenham, investment director at asset manager Rathbones, advises caution over the figures.
“We’re not out of the woods yet”, she said. “High levels of debt can still affect China’s growth further down the line. Today’s figures indicate that the economy is still fairly robust due in good part to manufacturing exports, rather than the transition to the new consumer economy.”
Many analysts also question the smoothness of official figures, believing growth to be much lower than suggested, as governments from Inner Mongolia and Tianjin admit to inflating industrial production they reported for 2016.
President Xi Jinping signalled at last October’s Communist party congress a shift away from focusing on maximising economic growth. The move suggests a new focus on the country’s pollution and social problems, which may impact future growth in 2018.
“[Mr Xi] understands that China can no longer play its high growth card”, Raymond Yeung, chief greater China economist at the bank ANZ wrote. “Issues like debt pile-up and air pollution could cause social unrest if not a financial meltdown.”