Why It Matters

China targets stable growth

A resident buying groceries at a supermarket in Beijing, China. PHOTO: REUTERS

China's economy ended 2017 on a stronger-than-expected footing, but the world's second-largest economy is likely to grow at a more modest, stable pace in the long term.

Last year's pick-up came amid a wider global recovery in trade, as the crucial United States and European markets continued to gain ground.

Trade-dependent Asian economies like Singapore are likely to benefit from this stabilisation, which comes afteryears of uncertainty.

China's economy grew faster than expected in the fourth quarter of 2017 as an export recovery helped the country post its first annual pick-up in growth in seven years. The economy grew 6.8 per cent in the October to December period from a year earlier.

Growth for the full year of 2017 came in at 6.9 per cent, the first annual acceleration for the economy since 2010. This easily beat the government's target of around 6.5 per cent and quickened from 2016's 6.7 per cent - the weakest pace in almost three decades.

The data comes amid Beijing's ongoing efforts to rebalance the Chinese economy away from an export-driven, state-dependent model towards one that banks on domestic consumption.

Economists largely expect this to result in a gradual, rather than a sharp, slowdown in growth. At the Communist Party Congress last October, President Xi Jinping said China has entered a new era where it looks to move from high-speed to high-quality growth to achieve moderate prosperity.

There are strong economic linkages between China and Singapore. China is Singapore's largest trading partner, and Singapore is China's largest foreign investor. More stable growth in China bodes well for Singapore and the region.

But concerns remain - for instance, over China's high levels of corporate debt. Interest rates around the world are set to climb from their historic lows, which will make high debt levels more problematic. These and other issues mean the road to sustainable long-term prosperity will likely be bumpy.

A version of this article appeared in the print edition of The Straits Times on January 24, 2018, with the headline 'China targets stable growth'. Print Edition | Subscribe