After China’s economy showed a positive outlook at the beginning of 2017 as PMI data showed that the country’s manufacturing activity have helped boost the economy’s overall stabilization.
Despite the slowdown in the country’s economy in December, the increase in Chinese exports has helped support the growth of a number of sectors other than the manufacturing including the industrial sector along with other sectors including consumer goods, automobile, pharmaceutical, and tobacco also all showed bullish outlooks.
Country’s Economy Underway On Rising Debt Levels
In January, the country’s economy broke out of the sudden after most economists stated that the China’s economy could advance in the same level as the United States along with India.
January data also showed that China who is currently the world’s second-largest economy is headed off to another steady growth as it held more reform and changes in the economy on top of the growing manufacturing and factory activity and the trading activity being able to meet up with the demands from corporate financing.
Despite the upward direction of China’s economy, some firms and economists were alarmed that the country’s debt have grown by more than 200% of the country’s GDP before the year 2016 ended largely brought about by multiple interest rates and the rise of the so-called ‘shadow financing’ who is known for lending money to already indebted corporations.
This worries most economists and the markets as well as the debt would spiral out of control and catch up with the economy’s ongoing growth and could weight the country’s stimulus. Aside from the growing private sector debt, the country’s local government debt was also raised as a concern by the people.
Despite the concern regarding the country’s debt, more investors and economists from all over the globe have kept their bets bullish when it comes to the economy of China as its economy continues to grow at a rate that might continue in the long run.
China who is now benefiting from the export-driven growth at an annual rate of 10%, the economy’s growth is seen by the markets as stable and normal.
In a report regarding the country’s private consumer market, around 47% of GDP would be accounted for by the surge in consumer consumption by 2030 to $9.6 trillion dollars which would mean that the Chinese consumer market would be holding a much higher income.
Although the concerns regarding the company’s debt have been amongst the top concerns of the market, the Chinese authorities have seemed to focus on stabilizing its currency over the growth of the economy according to most economist comments recently. This did not surprise economists as January data from China showed that the country’s foreign exchange reserves have fallen by $12.3 billion to $2.998 trillion compared to last June 2014 all-time high of $3.993 trillion.
Combining all these factors, the country is still headed for an economic growth as its performance during the early parts of 2017 has impressed markets given the ongoing growth of the manufacturing sector and the growing demand from the corporate sector. The economy also has shown a performance that proved the effectiveness of the country's efforts in changing its policies. Overall, China’s economy is rising but should be cautious of its monetary status.