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China has released their official economic growth numbers for 2016. As was to be expected, things are not looking great, although the sky is not falling either. With a 6.7% growth throughout 2016, the country falls short of expectations. Moreover, there are questions regarding the growth number, as it seems to reek of tampering. A previous report hinted at how 6.7% growth has been “achieved” for every quarter in 2016, which is an impossibly even number.
The world’s largest economy continues to cause a lot of headaches, though. Compared to 2015, the growth has slowed down by 0.2%, which is not a positive development by any means.Then again, the number falls within Beijing’s target range and is still higher than some people had anticipated at first. It appears the Chinese market is not collapsing just yet, even though things are not exactly positive either.
China Fails To Meet 2015 Economic Growth
Having the Chinese economy grow by virtually the same number every single quarter in 2016 seems highly unlikely right now. Considering how the country has gone through some turmoil in 2016, it is odd to see the same number being maintained for 12 months straight. Moreover, the Yuan has weakened quite a lot in 2016, which makes the number seem even more unrealistic.
Maintaining this precarious balance has been difficult for the Chinese government. Several stimulus levers have been introduced to keep the ball rolling. Thankfully, public investment in infrastructure soared to new heights throughout 2016. Bank lending also saw a strong nudge, despite the high level of corporate debt plaguing China. However, it is expected this stimulus-driven growth cannot continue much longer, and 2017 will be a defining year for the Chinese economy.
Experts still have questions regarding the accuracy of China’s economic data, though. Even though it’s hard to prove the numbers are incorrect, they should not be taken for granted either. With one of China’s governors admitting data has been tampered with before, doubts continue to linger. For now, China continues to strengthen its practices for data reporting accuracy.
All things considered, it appears China’s crackdown on capital outflows is working. Obtaining foreign currency or gold has become much more difficult. Then again, the foreign currency reserves of the PBOC continue to dwindle at an alarming rate. With the inauguration of Donald Trump just around the corner, this brittle momentum can be shattered quite quickly.
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