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--China GDP Annualised 6.8% In Q4; FY 2017 6.9%
--Consumption Growth Slower,Dec Annual Sales Growth Lowest Since 2004
BEIJING (MNI) - China recorded annualised GDP growth of 6.8% in the fourth
quarter and an annual growth rate of 6.9% in 2017, according to National Bureau
of Statistics (NBS). However, although Q4 slightly exceeding the market
expectations of 6.7% growth, as seen in the MNI survey, historically low retail
sales growth in December raised concerns over weaker domestic demand.
--SLOWER CONSUMPTIOON GROWTH
Retail sales grew 9.4% y/y in December, the slowest pace since February,
2004, and below the market expectation of a 10.2% gain, again as seen in MNI's
latest survey. The fall in sales was in line with the weak December import data.
Moreover, consumption spending contributed just 58.8% of GDP growth in
2017, much lower than 64.5% in the first three quarters in 2017 and 64.6% in
2016, pointing to weaker domestic demand.
In the past, retail sales growth dipped below 10% a few times, although
always bounced back immediately after every occurrence from 2003. Therefore,
more evidence may be needed before concluding that domestic demand has weakened.
Another point worth noting is rising inequality, which will curb
consumption growth. That is indicated by the difference in growth rates of
median and average disposable incomes. According to NBS, average and median
disposable incomes grew 9.0% and 7.3% in 2017, respectively, compared with 8.4%
and 8.3% in 2016.
--PROPERTY INVESTMENTS GAIN
Property investment in December slowed by 0.5 percentage point to 7% in
full-year 2017 from the first 11 months. Full-year 2017 was still 0.1% higher
MNI's recent analysis saw a strong pick-up in the property sector in
lower-tiered cities due to looser controls and China's urban renewal projects,
which helped drive investment growth in 2017.
Growth in property sales slowed to 7.7% in 2017 from the 22.5% growth seen
in 2016. It was also lower than the 7.9% in the first 11 months. The NBS doesn't
give single-month data. Yan Yuejin, director of the E-house Real-Estate Research
Institute, told MNI that sales by area volume in December reported the best
result in nearly 30 years.
Property sales by value dipped to a 13.7% gain in 2017 from 34.8% growth in
2016, showing price gains were effectively contained after the government rolled
out a host of measures to curb surging prices.
However, property developers remain upbeat over the outlook for the sector
given strong sales and low inventories.
Housing starts, an indicator of future property investment, provide support
to the upbeat outlook. Starts strengthened by 0.1 percentage point to 7% from
6.9% in the first eleven months, though below the 8.1% gain in 2016.
--INVESTMENT GROWTH LOST STEAM
Fixed-asset investment rose 7.2% from 2016, the lowest pace since 1999, and
lower than the 8.1% year-on-year growth in 2016. It was the ninth consecutive
month this year that the year-to-date investment growth rate has slowed.
The growth rate was dragged lower by the investment by state-owned
enterprises, which grew 10.1% in 2017, sharply down from the 18.7% in 2016.
However, private sector investment, although remaining relatively low, picked up
to 6.0% from a 3.2% gain in the previous year.
Infrastructure investment growth rose to 19% y/y, 1.1 percentage points
lower than the January-November period, but still above the 17.4% in 2016.
Infrastructure investment has played a leading role in supporting economic
growth this year, and MNI expects it to continue into 2018.
Pan-China property investment growth stood at 7.0%, lower than 7.5% in the
first 11 months, but higher than the 6.9% gain in 2016, suggesting the
government's policies to curb the property sector showing good effects.
Investment in manufacturing grew 4.8% y/y in December, up from 4.1% in the
first 11 months.
--INDUSTRIAL OUTPUT HIGHER
Industrial output grew 6.2% in December, higher than market expectations of
6.0% and also higher than the 6.1% growth in November. It grew 6.6% in 2017 year
on year, rising from 6.0% in 2016.
In 2017, industrial output growth shows a pattern of ending the quarter on
an upbeat note, although the December outperformance was lower than in March,
June and September.
The manufacturing sector and heat, electricity, gas and water providing and
supply sector grew a respective 7.2% and 8.1% annually in 2017, higher than the
6.8% and 5.5% seen in 2016.
The mining sector contracted 1.5% in 2017, compared with a 1.0% contraction
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