Slowed growth, soft landing for China in 2017: BBVA

HONG KONG - Notwithstanding a number of growth headwinds, including tightening measures in the property market and accelerated capital outflows accompanied by faster-than-expected currency depreciation, China’s ongoing economic recovery appears to be more resilient than previously anticipated, says BBVA Research.

“However, we believe these headwinds are still ahead which will weigh on the 2017 growth.”
The full year growth rate of 6.7% surpassed the authorities’ target of 6.5%.

BBVA points out that announced FAI and Industrial production in December decelerated marginally from previous readings.

“As growth headwinds are still ahead, such as continuing RMB depreciation, corporate debt overhang and housing market adjustment, we expect growth to continue its downtrend this year,” it says.

“Growth was supported by stabilising FAI, IP and upward retail sales FAI marginally dropped to 8.1% ytd y/y from the previous month of 8.3% ytd y/y, while industrial production also marginally decelerated to 6% y/y from 6.2% y/y in November

“On the other hand, private investment, which is our prime concern of growth sustainability, slightly picked up from 3.1% ytd y/y previously to 3.2% ytd y/y.

“In addition, retail sales picked up from 10.8% y/y the previous month to 10.9% y/y, underpinned by strong auto sales as well as the effect of Chinese New Year.”  www.bbvaresearch.com (ATI).