China's economy picks up slightly in 2016 but the rebound is below expectations

Saturday, January 21st 2017 - 11:11 UTC

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Some observers say China's growth is actually much weaker than official data suggests. For the IV quarter, the world's second biggest economy grew by 6.8%.

China is the world's second-biggest importer of both goods and commercial services, meaning its economic performance has a big impact around the world.

China's economy grew by 6.7% in 2016, compared with 6.9% a year earlier, marking its slowest growth in more than a quarter of a century. China's growth is a key driver of the global economy and a major concern for investors around the world. The figure is in line with Beijing's official growth target of between 6.5% and 7%.

But some observers say China's growth is actually much weaker than official data suggests. For the fourth quarter, the world's second biggest economy grew by 6.8%.

China is the world's second-biggest importer of both goods and commercial services, meaning its economic performance has a big knock-on impact around the world. It plays an important role as a buyer of oil and other commodities. Its slowdown has been a factor in the decline in the prices of such goods.

Beijing's aim to rebalance the economy towards domestic consumption has led to major challenges for large manufacturing sectors with layoffs, especially in heavily staffed state-run sectors such as the steel industry.

Although China's economy picked up slightly in the last three months of 2016, the rebound was not expected to continue according to the Economist Intelligence Unit (EIU) which is predicting growth of 6.2% this year.

“A slowdown in the property market and steps to address supply shortages in the commodity sector ought to drag again on demand and output,” said the EIU's Tom Rafferty. He also pointed to potential damage to US-China trade ties under a Donald Trump presidency.

Meanwhile Tim Condon from ING in Singapore said relations with a Trump administration were “the biggest known unknown”.

“Trump advisers and cabinet-nominees have identified the US-China relationship as in need of adjustment to support the president-elect's objective a manufacturing renaissance.”

The trade of goods and services between US and China amounted to an estimated US$659bn in 2015. The US has a trade deficit with China, totaling US$336bn in 2015.