After surprising solid growth in the first half of the year, China’s economy has maintained growth momentum, which is expected to hold up through to the end of the year despite tighter policy.
Annual growth of the world’s second-largest economy came in at 6.9% in the first six months this year, as recovery of global demand boosted Chinese shipments and domestic consumption helped to mitigate the impact of policymakers’ efforts to reduce debt.
According to a Reuters poll, over the next few weeks August data is likely to back market expectations for growth to decline only modestly from the first half of the year. On the whole, the August data should back predictions that China’s economy will perform well ahead of the key political meeting of the ruling Communist Party and give policymakers an opportunity to deepen the needed reforms.
Most economists forecast China’s economy to slow only moderately and to easily break through the government’s 2017 growth target of around 6.5%. A stronger yuan on the back of a weak US dollar helped to stabilize global markets which were frightened by a possible weakening of the Chinese currency, which was accompanied by capital outflows and a sharp decline in the country’s foreign currency reserves.
Analysts expect that China’s foreign currency reserves, the largest in the world, will increase for a seventh month in a row to $3.1 trillion in August from $3.081 trillion in the prior month. Exports growth is seen to decline to 6% in August from 7.2% in the previous month, while imports growth is expected to slow down to 10 % from an 11% increase.
Inflation is projected to have risen to 1.6% in August year-on-year from 1.4% in July, which would be the first uptick in four months.
