Trump and debt cast shadows over Chinese economy

China's economic growth in 2016 amounted to 6.7 per cent according to official data from Beijing, released amid fears of a future downturn if a trade war with President Donald Trump's America materialises.

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Last year's figure compared to 6.9 per cent in 2015, although analysts have long questioned the accuracy of Chinese government figures – a sentiment enhanced earlier this week by Chen Qiufa, governor of Liaoning province, who admitted his province had been “involved in a large-scale financial deception” between 2011 and 2014, and that GDP data had been doctored.Ning Jizhe, the director of China's National Bureau of Statistics, insisted on Friday that the national economic data was “truthful and reliable” and that his department would be “strengthening the law enforcement, supervision and checks on figures” to prevent any fabrication of data.Stephen McDonell, BBC Beijing correspondent, commented, “Plenty of economists think that GDP is a massively flawed form of measuring the health of any economy but in this country it is even worse. There is a significant proportion of China watchers who don't believe the GDP figures are real at all.

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“For example, in 2016, the country's (year on year) GDP was exactly 6.7 per cent for three quarters in a row. While this seems numerically unlikely, I suppose it is possible that this could happen. Without solid, reliable figures this remains a debate with wide-ranging, conflicting views.“Mind you, even if at worse China's real GDP is around four per cent at present, there are plenty of national governments which wouldn't mind a taste of those numbers.”In an analysis by ABC, business correspondent Stephen Letts added, “By happy coincidence, the 2016 result not only lines up with President Xi Jinping's call at the World Economic Forum in Davos that it would be thereabouts, but also is right in the middle of the 6.5 to 7 per cent target band drummed up at the National People's Congress in March last year.“The quality of Chinese GDP data is often questioned, given the National Bureau of Statistics can pull together all the threads of the world's second biggest economy into a coherent narrative just three weeks after the quarter ends.“The admission this week from the boss of Liaoning province that the GDP books for his steel and coal-dominated jurisdiction had been cooked for years has not helped matters.“The National Audit Office found revenues from Liaoning's industries and state-owned enterprises were at least 20 per cent higher than what should have been reported between 2011 and 2014, with 2013 representing the peak in creative accounting for one area at 130 per cent over the odds.”Aside from doubts over the figures – which stated there was faster-than-expected growth 6.8 per cent in the fourth quarter – economists have increasing fears over China's debt-to-GDP ratio, which increased by almost 10 per cent to 277 per cent over the course of 2016, and the potential impact on trade of a Trump presidency.“The key risk to the Chinese economy in 2017 and 2018 is the possibility that faster than expected US interest rate increases could intensify Chinese capital outflows and increase stresses on China's financial system,” said Bill Adams, senior economist at PNC Financial Services HQ in Pittsburgh.Tim Condon, an economist with ING in Singapore, added, “Relations with a Trump administration is the biggest known unknown. Trump advisers and cabinet-nominees have identified the US-China relationship as in need of adjustment to support the president-elect's objective of a manufacturing renaissance.”Allowing the yuan to appreciate was “the path of least resistance for the world's most important bilateral economic relationship” said Mr Condon, despite the problems this might cause for Chinese exporters.

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