Regional Analysis 2018 China and Taiwan R.O.C

Knowledge Center

China Market Review - section updated Sept 2018

As the world’s second-largest economy, China’s GDP grew by 6.9% last year, which is higher than anticipated. This was above the Government’s official target of 6.5% and marked a recovery from a 26-year low of 6.7% in 2016. GDP growth in the Q4 was 6.8%, which was the same as Q3, but slower than the 6.9% growth in the first two quarters. GDP growth will be more moderate this year at 6.5%, with greater emphasis on reforms.

The services sector led growth with an increase of 8%, outpacing the industrial sector’s 6.1% and the agricultural industry’s 3.9%. Industrial value-added output expanded by 6.6% year-on-year in 2017, up from 6% the previous year, and was led by high technology and equipment manufacturers.

 China’s GDP grew by 6.9% in 2017, above the Government’s official target of 6.5% and marking a recovery from a 26-year low of 6.7% in 2016.

Structural reforms progressed last year, with capacity reduction in high energy consumption industries, lower debt burden in industrial companies, and greater investment in agriculture and environment protection.

13 million new jobs were created in 2017, and the foreign exchange reserves rose to US$3.14 trillion. Fixed-asset investment rose by 7.2% year-on-year. Private investment reached ¥38.15 trillion, up 6% year-on-year, which is 2.8 percentage points faster than the previous year and accounts for 60.4% of total investment.

Online sales of physical goods rose by 32.2% to ¥7.18 trillion, amounting to 15% percent of total retail sales, and standing 2.6 percentage points higher than 2016’s figure. These increases are attributed to the faster-than-expected growth more so than Government stimuli.

Although the outlook for the Chinese economy remains relatively positive, there are potential risks, which include a lower level of property investment, lower growth and higher inflation, as well as escalating trade friction with the United States.

Contributors: John Butler, Michael Murphy, Helen Jie Shao