World

China economy picked up speed in 2017 with 6.9% growth

Growth higher than expected despite major battles with debt and pollution

BEIJING: China's economy grew a forecast-beating 6.9 per cent last year, picking up steam for the first time since 2010 despite its battles against massive debt and polluting factories, official data showed yesterday.

The world's second biggest economy eclipsed the official target of about 6.5 per cent and picked up pace from the 6.7 per cent growth seen in 2016, which was the slowest for more than a quarter of a century.

"The national economy has maintained the momentum of stable and sound development and exceeded the expectation with the economic vitality, impetus and potential released," National Statistics Bureau head Ning Jizhe said in a report.

"We should also be aware that there are still difficulties and challenges confronting the economy and the improvement of quality and efficiency remains a daunting task," he added.

The reading - which beat the 6.8 per cent predicted by analysts surveyed by AFP - comes as China ramped up its war on pollution, halving production for steel smelters and mills. The battle has brought unusually blue skies to Beijing, with the density of dangerous pollution - particulate PM2.5 - dropping by more than 50 per cent in the final quarter of last year.

STRONG TRADE

The GDP reading follows strong trade data last week, which showed the humming global economy had propelled China's export machine.

"This momentum, especially the part fuelled by external demand, may carry on well into 2018," said Mr Wei Yao, chief China economist at Societe Generale.

The country is also facing pressure to prevent a credit crisis, with local government debt growing 7.5 per cent last year to US$2.56 trillion (S$3.4 trillion), according to figures released on Wednesday.

China has largely relied on debt-fuelled investment and exports to drive its huge economic growth of the past four decades but it is now seeking to move its economy to more sustainable consumption-based growth.

The latest figures show the services industry grew eight per cent for the year with retail sales spiking 10.2 per cent, good news for the transition.

The International Monetary Fund has warned of risks stemming from China's ballooning debt, saying last year that each extra dollar of debt is producing diminishing returns for China's economy.

Last year, China reduced the pace of debt accumulation but allowed overall credit growth, analysts say. - AFP

WORLD