China is capable of achieving steady GDP growth this year despite global uncertainties, according to Ding Shuang, chief Greater China economist with Standard Chartered Bank, who expects the economy to grow 6.6 percent in 2017.
However, analysts also point out that the rosy picture at the start of the year does not mean China will have an easy journey ahead for the whole year.
U.S. policies towards China and elections in post-Brexit Europe might complicate the international environment for future Chinese trade growth.
Domestically, falling sales of real estate and cars, once major pillars of Chinese consumption, might drag on China’s growth.
Official figures for property sales in January are to be released later this month, but prices are expected to fall due to tightening policies.
A survey from the Chinese Academy of Social Sciences Wednesday showed that over half of the 30 sample cities, including Suzhou and Wuhan, saw flat or falling month-on-month house prices.
The growth of auto sales in China slowed sharply to 0.2 percent year on year in January from a 9.5-percent rise in December 2016, affected by holidays and reduced tax discounts, according to China Association of Automobile Manufacturers data.
“The development of new economic growth engines is the major criterion to decide whether the economy is firming up, and it seems that China still has much work to do,” said Zhang Junkuo, deputy director with the Development Research Center of the State Council.
To reduce restrictions on the new economy, China decided to step up the process of approving, revising and abolishing laws and regulations, and to allow local authorities to implement their own rules to test new business models in low-risk sectors, including logistics, education and tourism, according to the State Council last month.
Ding Shuang expects China’s service sector will grow faster in 2017 as Chinese demand better entertainment, health care, education and travel experiences, which could contribute to about 60 percent of GDP.
New business models are growing fast in China. For example, car-sharing services are springing up in many cities after bicycle-sharing became popular across the country.
Ding pointed out that to sustain steady growth at about 6.5 percent, China would still have to combine effective policy tools.
“While China decided to take a prudent and neutral monetary stance, the government needs to take more proactive fiscal policies to help prop up growth,” Ding said.