The Chinese economic growth is likely to have decelerated to 6.7% y/y in the final quarter of 2017. While measures have been taken by China’s officials to promote domestic demand some years ago, the strategy is set to work with domestic demand expected to remain strong in the fourth quarter.

While retail sales are expected to decelerate slightly in December, the sales are still seen retaining a double-digit growth with consumer confidence remaining strong. On the investment side of the Chinese growth story, fixed asset investment is expected to have slowed further to 7.1% y/y in December after People’s Bank of China (PBoC) hiked rates in a move that has basically copied the US Federal Reserve with the monetary policy tightening.
 
While the manufacturing activity measured by the National Bureau of Statistics’ (NBS) manufacturing PMI slowed during the final quarter of last year, the Chinese industrial production is expected to decelerate the growth rate to   6.0% y/y in December as the overcapacity is being continuously scaled back.

On top of it, the export performance remains strong with exports rising way above expectations in recent months and the trade balance recorded above-expectation surpluses.

As a result, the Chinese growth picture remains broadly positive although the economy is deleveraging.

On a risk side, any kind of negative China growth surprises would become a source of major concern in 2018, especially in terms of emerging markets FX, with smaller emerging market economies potentially facing investment outflow pushing their currencies lower. There is no other emerging market economy with that has the potential to cause a wholesale re-rating of future growth than China. In case of stronger deceleration, negative sentiment would spread via commodity and trade channels quickly. Market analysts expect China’s growth deceleration to 6.2% in 2018, as the cumulative impact of shadow banking deleveraging and housing market tightening finally filter through to the economy.      
 

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures