(MENAFN- AFP) China's economy grew last year at its slowest rate in more than a quarter-century but while Friday's data pointed to much-needed stability, Beijing is bracing for an uncertain outlook that could see a trade stand-off with Donald Trump.
After a tumultuous start to 2016, the country's leaders managed to steer the world's number two economy with further stimulus to hit their annual target and even record the first quarterly pick-up in two years.
The Asian giant is a crucial driver of global growth but Beijing is trying to reduce its heavy reliance on exports and state-backed investment and instead focus on domestic consumer spending to drive expansion.
However, the transition has proved bumpy, with the crucial manufacturing sector struggling in the face of sagging global demand for its products and excess industrial capacity left over from an infrastructure boom.
This led to the economy growing 6.7 percent last year, in line with forecasts in an AFP survey but down from 6.9 percent in 2015, and the worst reading since 1990. The government targeted 6.5-7.0 percent.
The October-December increase of 6.8 percent also marked the first quarterly improvement since the final three months of 2014.
The National Bureau of Statistics called the figure a "good start" for the government's goal of achieving 6.5 percent annual growth through 2020.
"China's economy was within a proper range with improved quality and efficiency. However, we should also be aware that the domestic and external conditions are still complicated and severe," the NBS said in a statement.
It added that the coal and steel industries had cut overcapacity, but structural reform should be the "mainline" this year, urging policymakers to focus on "fending off risks" to stability.
The positive close to the year was in contrast to the beginning, when worries about the state of the economy hammered global markets and the yuan tumbled against the dollar.
- 'Harsher climate' -
The improvement came on the back of a property boom in the first three quarters, loose monetary policy, and strong fiscal support, OCBC Bank's Tommy Xie told Bloomberg News. But he warned "those three factors will all wane in 2017".
There is also growing concern about the outlook as Donald Trump takes up residence in the White House, with the tycoon having repeatedly accused Beijing of unfair trade practices and threatened to slap huge tariffs on its goods. He has also accused it of manipulating its currency.
It is clear that China's exports to the US "will face a harsher climate" under the Trump administration, which will weigh on growth, Louis Kuijs of Oxford Economics said in a note, forecasting growth to slow to 6.3 percent next year.
Adding to uncertainty is a painful flood of money out of the country, with an expected hike in US interest rates leading investors to seek better returns, despite a series of measures aimed at stopping people removing their cash, sending the yuan to eight-year lows.
The weaker yuan helped boost exports in the second half, but soft December trade data added to worries about possible battles with Trump, who takes office Friday.
A long-running bad debt problem has also still to be addressed, with warnings from the IMF to the Bank of International Settlements that failure to do so could fan a serious financial crisis.
Other figures also released Friday showed China's industrial production rose 6.0 percent year on year in both December and the full year, while retail sales increased 10.9 percent in the month and 10.4 percent for 2016.
Fixed-asset investment, a gauge of infrastructure spending, expanded 8.1 percent during the full year.
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