Financial Services Focus Group Quarterly Update – Q4 2016

Published on 2017-02-08

China’s economic data for November 2016 suggests stable growth on better domestic and foreign demand with increases in industrial production, retail sales and fixed asset investment.

  • Industrial production increased by 6.2% year on year in November
  • Retail sales growth rebounded to 10.8% year on year growth in November with better auto and online sales
  • Year-to-date fixed asset investment grew by 8.3% in November with stronger manufacturing investment. Real estate investment growth retreated to 5.7% year on year growth in November as property market regulations began to take effect.
  • The official manufacturing PMI climbed to 51.7, its highest level in the past two years

Financial risks and asset bubbles are seen as possible threats to economic stability.

Capital outflows accelerated in November. Non FDI capital outflows were approximately USD74bn in November, the highest level since January 2016. Total non FDI capital outflows reached USD620bn for year to date November 2016 compared to USD758bn for the full year of 2015 The chinese authorities tightened policy on overseas investments in late November. Expectation is that the government will continue with capital outflow controls to contain FX reserves. China’s FX reserves were USD3.05 trillion at the end of November 2016.

China’s annual Central Economic Work Conference was concluded on 16 December. The meeting indicated that economic policies for 2017 would focus on the following five areas; maintaining stable growth; advancing supply-side reforms; adjusting the economic structure; improving social welfare; and containing risks. The stated policy objective was to realise stable and healthy economic development and social stability.