China Economic Quarterly Q4 2017

Better than expected growth in 2017 might guarantee a good year in 2018

The China Economic Quarterly is a market outlook prepared on a quarterly basis by PwC to share the latest economic and policy updates. This issue provides analysis of major economic data points in China for Q4 2017, summarises main policy developments and discusses hot topics of interest. China’s GDP growth for the fourth quarter has increased 6.8% year-on-year again, following the same rate for the third quarter.

Major economic indicators

Here are some highlights of the Q4 updates:

  • Total GDP reached to 82.71 trillion yuan (about US$12.84 trillion), with an annual growth of 6.9% for the whole year, the first pickup in GDP growth rate since 2011. This is much better than the market expectation. We believe that the steady growth in 2017 might guarantee a relatively good year in 2018. 
  • Services (consumption) plays a leading role in driving China’s economic growth, and fixed asset investment, amounting to 76.4% of GDP, remains a vital force. 
  • In 2017, profits of industrial enterprises over certain scales rose to 7.52 trillion yuan, an increase of 21.9% year-on-year. We expect the growth of industrial added values and profits would continue in 2018.
  • During the first three quarters, China’s imports accounted for 10.2% of global imports, contributing 17% to its growth. For 2018, we expect China’s total trade would continue to grow at a higher pace and exceed the overall GDP.


China’s quarterly policy updates

China’s top leadership mapped out economic plans for 2018

The Annual Central Economic Work Conference, which usually sets the tone for China’s economic policies for the following year, was held in Beijing from 18-20 December 2017. According to the statement of the conference, eight priorities were highlighted for 2018. They include deepening supply-side structural reform and resolving overcapacity through innovation; invigorating the vitality of different market forces; pushing ahead with rural prosperity program; implementing coordinated strategies for regional development; promoting all-round opening-up policies; improving people’s livelihood and social welfare; speeding up the establishment of a long-term mechanism for a stable, healthy housing market; and further promoting ecological civilisation.

New policies in boosting China’s private investment

On November 20, 2017, the Ministry of Industry and Information Technology, together with 15 other central government agencies released the “Guidelines on Exerting the Function of Private Investment and Promoting the Implementation of the Manufacturing Power Strategy” that aims to break the systemic investment barriers and revitalise China’s dwindling private investment. The Guidelines proposed eight tasks to enhance the capacity of private manufacturing. The tasks include improving the capacity of innovation development; enhancing the fusion of informatisation and industrialisation; participating in upgrading basic industrial capacity; improving quality and brand; promoting green manufacturing; optimising industrial structure and participating in mixed-ownership reform of the state-owned enterprises (SOEs); promoting transformation of services; and fostering international development and overseas investment.

China’s response to the US tax reforms

With the aim to re-gain its global attractiveness and competitiveness, the US law makers recently enacted the most comprehensive tax reform since 1986, effective from 1 January 2018. The US tax reform is expected not only to affect US domestic economy and US-based multinational corporations (US MNCs), but also has awakened the attention and concerns of other economies and international organisations, in light of the large swath of new international tax rules introduced and its spillover effects. 

What is the impact of real estate macro control on China’s economy?

In the past two years, China’s central and local governments had issued probably some of the strictest macro control and regulation policies on the real estate market.  The main theme of China’s macro control on property market can be summarised largely by the words of President Xi Jinping that “housing should be for living, not for speculation”.  There is no doubt that preventing speculation on the property market is the right approach to curb real estate bubbles. However, what is the impact of real estate macro control and regulation on China’s economy? Is China ready to face the consequence of these measures?

Contact us

Thomas Leung

Mainland China and Hong Kong Managing Partner - Markets, PwC China

Tel: +[86] (10) 6533 2838 / +[852] 2289 8288

Elton Huang

China Central Markets Leader, Shanghai Office Leader Partner, Entrepreneurial and Private Business Co-Leader, PwC China

Tel: +[86] (21) 2323 3029

Elton Yeung

Vice Chairman, Strategy and Innovation Leader, PwC China

Tel: +[86] (10) 6533 8008

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