China GDP accelerates sharply in Q4, official data questioned
China´s economic expansion accelerated slightly at the end of 2016, official government data revealed, but more timely figures for December appeared to point to a slowdown in activity, in part as the fiscal stimulus put in place by the authorities faded, economists said.
Some analysts also questioned the reliability of the official government statistics, telling clients that while the acceleration seen in China´s gross domestic product during the fourth quarter of 2016 was larger than indicated by the official figures, it had taken place from a much lower base.
"The upshot is that while China’s economy is currently witnessing relatively strong growth, there are some signs in today’s data that momentum may have begun to soften at the end of last year. With tailwinds from policy stimulus now fading, we expect clearer signs of a renewed slowdown to emerge during the next couple of quarters," Julian Evans Pritchard, China economist at Capital Economics, said in a research report sent to clients.
During the fourth quarter, China´s gross domestic product expanded at a year-on-year clip of 6.8%, following three consecutive quarters of growth at 6.7%, data published by the National Bureau of Statistics showed.
A fourth quarter of identical GDP growth would have pushed the credibility of government statisticians in Beijing, Evans-Pritchard mused.
"Today’s figures have still been met with scepticism, however, not least because they come on the back of an official admission of data fabrication in Liaoning province," he added.
In reality, the economy was likely growing closer to 6.4%, Capital Economics said, referencing readings from its own 'in-house' proxy for Chinese growth, but after growth of just 5.3% in the third quarter and of 4.4% in the first half of 2016.
Other data, also published on Friday, included readings on retail sales, industrial production and fixed asset investment.
Retail sales grew by 10.9% on the year in December (consensus: 10.7%), versus 10.8% in the month before.
Industrial production, on the other hand, grew by 6.0% year-on-year, down from a 6.2% pace.
Fixed asset investment also ticked lower, growing by 8.1% for all of 2016, which was down from the 8.3% observed over the first eleven months of the year, amid what Evans-Pritchard labelled as a "sharp slowdown" in state-led infrastructure spending.
For their part, analysts at Bank of America-Merrill Lynch told clients that Friday´s two sets of data suggested economic momentum remained firm, which would likely result lessened policy support from policymakers.
"With tapered policy support on growth and potentially more tightening in monetary and property spaces, we believe the risks are on the downside for growth in 2017.
"In the absence of further easing, we expect a moderate growth slowdown into 1H17 mainly due to investment growth weakness."