2017年-世界发展银行全球_China_Economic_Update_December_2017___Growth_Resilience_and_Reform_Momentum_27页_1mb

China Economic Update - December 2017

Core Content

This report provides an overview of China's economic developments and policy priorities in 2017, highlighting the resilience of growth and the ongoing focus on deleveraging and reform. It outlines both recent performance and long-term structural challenges.

Main Points

1. Economic Growth and Rebalancing

• GDP Growth: Remained strong, exceeding market expectations, with growth of 6.9% yoy in the first half of 2017 and 6.8% in the third quarter.
• Growth Drivers:
  • Final Consumption: Continued to support growth, contributing 4.5 percentage points to GDP in Q1-Q3 2017, up from 2.8 in 2016.
  • Income Growth: Real average disposable income grew by 7.5% yoy in Q1-Q3 2017, outpacing GDP growth and boosting consumption.
• Investment Contribution: Declined to 2.3 percentage points yoy in 2017, reflecting a shift toward consumption-led growth.
• Private Investment: Slowed significantly, with real fixed asset investment (FAI) growth in the private sector turning negative in Q3 2017 at -3.1% yoy, despite improved corporate profits.

2. Trade and Capital Flows

• Global Recovery: Supported China's economic activity, with net exports contributing positively to GDP growth in Q1-Q3 2017 (0.2 percentage points), compared to a negative contribution in 2016.
• Trade Growth: Exports of goods and services increased by 9.4% yoy in Q1-Q3 2017, while imports rose by 15.4% yoy, driven by higher commodity prices.
• Capital Outflows: Declined sharply to USD 47 billion in Q1-Q3 2017, down from USD 479 billion in the same period in 2016, due to tighter capital controls and increased market confidence.
• Renminbi Appreciation: Rose by 5.0% against the US dollar over January-November 2017.

3. Monetary and Financial Policy Tightening

• Monetary Policy: Tightened since late 2016, with reduced liquidity provision and higher policy rates. The PBOC injected RMB 1.4 trillion in Q1-Q3 2017, compared to RMB 4.1 trillion in 2016.
• Credit Growth Moderation: Total credit to the non-financial sector grew at an annualized rate of 14.1% in Q1-Q3 2017, down from 15.9% in 2016.
• Deleveraging: A major focus of policy, particularly in non-bank financial markets and local government financing vehicles (LGFVs). The growth of entrusted loans and corporate bonds slowed, and the stock of wealth management products (WMPs) declined by 2% in mid-2017.
• Banking Sector: Experienced slower asset growth, especially among smaller city and joint-stock banks, due to reduced investment in asset management products (AMPs).

4. Fiscal Policy and Budget Reforms

• Revenue Growth: Increased by 8.4% yoy in Q1-Q3 2017, with tax revenues rising by 11.2%.
• Expenditure Growth: Slowed to 7.8% yoy, leading to a less accommodative fiscal stance.
• Fiscal Balance: Improved to -2.2% of GDP in Q1-Q3 2017, down from -2.9% in 2016.
• Budget Reforms: Ongoing efforts to improve subnational debt management and fiscal transparency, with mixed results and continued challenges.

5. Consumption-led Rebalancing

• Job Creation: Almost 11 million urban jobs were created in Q1-Q3 2017, supporting household income and consumption.
• Income Inequality: The Gini coefficient declined from 0.491 in 2008 to 0.465 in 2016, reflecting a narrowing urban-rural income gap due to faster rural income growth.

6. Deleveraging as a Priority

• Non-Financial Sector Leverage: Still rising, albeit at a slower pace, with total credit to the non-financial sector reaching 242% of GDP in November 2017.
• House Price Growth: Moderated from 10.4% yoy in Q4 2016 to 5.6% in November 2017, affecting household consumption and the real estate sector.
• Long-Term Outlook: Deleveraging and structural reforms are seen as essential for long-term economic stability and growth, even if they lead to short-term slowdowns.

Key Information

• Growth Resilience: Despite tighter policies, China's economy maintained strong growth, driven by domestic consumption and improved trade conditions.
• Policy Tightening: Monetary and fiscal policies have been tightened to control leverage, improve financial stability, and promote structural reforms.
• Reforms:
  • Budget Reform: Aimed at improving local government debt management and fiscal discipline.
  • Pension System: Expanded coverage but faces challenges in integration, sustainability, and benefits.
• External Risks: Trade tensions and potential tightening of monetary policy in advanced economies pose risks to China's outlook.
• Financial Stability: A key priority for the government, with measures targeting bank risk, WMPs, and AMPs.

Conclusion

China's economy in 2017 showed resilience despite macroeconomic tightening, supported by strong consumption and improved trade. The government's focus on deleveraging and structural reforms, particularly in the fiscal and financial sectors, is expected to have long-term benefits. However, challenges remain in achieving sustainable growth and reforming key areas like the pension system and local government debt management. The outlook for 2018 and 2019 is for continued moderate growth, with a focus on quality and sustainability.