China’s economy gets off to strong start in 2017 as investment rebounds

China’s economy gets off to strong start in 2017 as investment rebounds

International News

China issued a raft of upbeat data on Tuesday showing the economy got off to a strong start to 2017, supported by strong bank lending, a government infrastructure spree and a much-needed resurgence in private investment. Solid growth is welcome news for China’s policymakers as they turn their focus to containing risks from a sharp build-up in debt ahead of a major leadership reshuffle later this year. But economists are not sure how long the pace can be sustained as the central bank takes a tighter stance on credit and exporters brace for a surge in U.S. protectionism. Fixed-asset investment expanded more strongly than expected in the first two months of the year as growth in private investment more than doubled from 2016, while surging demand for steel for new roads, bridges and homes lifted factory output. That added to readings last week showing robust imports, particularly of commodities such as iron ore, and a sharp rise in producer prices which is boosting industrial profits. “Today’s data appeared to be mainly driven by infrastructure spending and a rebound in the real estate sector,” said Zhou Hao, a Singapore-based economist at Commerzbank. China has cut its growth target to around 6.5 percent this year to give policymakers more room to push through painful reforms to reduce financial risks created by years of debt-fuelled stimulus. The world’s second-largest economy grew 6.7 percent last year, the slowest pace in 26 years.