China's economy is reporting impressively strong numbers. The country's National Bureau of Statistics estimates that its gross domestic product grew by 6.9 percent in the fourth quarter of 2017, making this the first time the Chinese economy has reported accelerated growth since 2010. The normal growth rate also came in at 11.2 percent, the best performance since 2011. Although the accuracy of Chinese economic statistics is always subject to debate, the recently released numbers are still a positive sign for the Chinese economy.
The better-than-expected growth is especially promising considering how many measures China has taken this year to rebalance economically that could have countered growth, including a deleveraging campaign designed to reduce financial risks, efforts to phase out industrial overcapacity, and tighter enforcement of environmental protections. Though private consumption — a key marker for China's economic rebalancing goals — dipped slightly, the Chinese economy benefited greatly from a robust trade environment, particularly for the country's exports.
Despite robust growth, China's economy is expected to face greater challenges in 2018: The United States has been looking at options to punish Beijing through harsher trade regulations under U.S. President Donald Trump. And the Chinese government has limited options to fuel the economy as it continues combatting the country's high debt buildup while also trying to manage a slowing real estate market — a linchpin of China's economy.
But as Beijing continues deleveraging its economy, the newly released figures point to a healthier trend evidenced by the country's credit-to-growth ratio. The figure — which measures the amount of new credit needed for an additional unit of GDP — declined by an estimated 29 percent since 2016 to reach its lowest average since 2011. In essence, this means that China's deleveraging efforts are paying off and that China is getting more bang for its credit buck. As China's mountain of debt continues growing, Beijing will continue balancing growth against debt to ensure the country's stable financial future.
