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Hello, forex friends! China had a data dump during the past couple of weeks. And if you want a roundup of the most important economic reports, or if you’re just curious on how China’s economy is doing nowadays, then this Economic Snapshot is just for you.

Note: As with all Economic Snapshots, there are nifty tables at the bottom, so you can skip to those if you’re a forex trader who’s in a hurry. The bullet points provided highlight the underlying details and trends that give the numbers their proper context, however.


  • China’s Q4 2016 GDP expanded by 1.7%, a slower rate of expansion compared to Q3’s +1.8%.
  • Moreover, China’s quarterly GDP growth has been slowing down for two straight quarters already after peaking at 1.9% back in Q2.
  • Year-on-year, however, China’s GDP grew by 6.8%.
  • This means that China managed to hit the PBoC’s target growth rate.
  • For reference, the PBoC’s target range for annual GDP growth in 2016 is 6.5%-7.0%.
  • In terms of trend, the year-on-year reading accelerated after three consecutive quarters of steady +6.7% growth.
  • Using the output approach, annual GDP growth was driven mainly by higher output from the electricity, gas, and water industry (+5.5% vs. +4.3% previous) and the wholesale and retail trade industry (+7.2% vs. +7.0% previous), as well as the jump in output from the other services industry (+10.6% vs. +8.8% previous).
  • These was were partially offset by weaker growth from manufacturing (+6.8% vs. +6.9% previous), the financial services industry (+3.8% vs. +5.6% previous), real estate (+7.7% vs. +8.8% previous), and the agriculture, forestry, and fishery industry (+3.1% vs. +4.1% previous).
  • There was no GDP breakdown using the expenditure approach, but the National Bureau of Statistics (NBS) released a separate report which stated that fixed asset investment (in yuan) only grew by 8.8% year-on-year in Q4, slowing from Q3’s +9.5%.
  • For the entire year, China’s economy grew by around 6.7%.
  • This is slower than 2015’s +6.9%, and is the weakest whole year growth in 26 years to boot.


  • Month-on-month, China’s headline CPI rose by 0.2% in December, which is faster than November’s +0.1%.
  • The faster reading was due primarily to the 0.3% increase in the price of food, tobacco, and alcohol (+0.2% previous), 0.5% increase in transportation and communication costs (+0.0% previous), the 0.2% increase in price of household items and services (+0.0% previous), and the 0.1% recovery in the cost of education, recreation, and culture (-0.3% previous).
  • These were partially offset by the 0.1% fall in clothing prices (+0.6% previous) and the weaker increase in the cost of healthcare (+0.5% vs. +0.4% previous).
  • Year-on-year, CPI grew by 2.1% in December, a slowdown from November +2.3%.
  • The weaker reading also breaks three consecutive months of ever better annual CPI readings.
  • In addition, the reading missed the PBoC’s 2016 target for annual inflation (around 3.0%) by a long shot.
  • The weaker reading was primarily due to the weaker increase in the price of food items, tobacco, and alcohol (+2.2% vs. +3.2% previous).
  • Although the weaker increase in the price of clothing (+1.1% vs. +1.4% previous) also weighed on the annual reading.
  • On a more upbeat note, the annual core reading advanced by 1.9%, which is the same pace as in November and the the best reading since December 2013 to boot.
  • Most food items are stripped from the core reading, which is why it printed a steady pace of increase.

Business Conditions & Sentiment

  • The official manufacturing PMI reading from the National Bureau of Statistics (NBS) fell from 51.7 to 51.4 in December.
  • It’s still the second highest reading for the year, though.
  • Moreover, it’s also still the second highest reading since July 2014.
  • Commentary from the NBS noted that the tumble was due to the production index sliding from 53.9 to 53.6 and the employment index falling further from 49.2 to 48.9.
  • Meanwhile, the official non-manufacturing PMI reading for December dipped from 54.7 to 54.5.
  • However, this happens to be the second highest reading for the year.
  • And like the official manufacturing PMI reading, it’s also the highest reading since July 2014.
  • The weaker reading in December was due to the employment index falling from 50.6 to 50.0 and the business activities expectation index dropping by 1.2 index points to 59.5.
  • The manufacturing PMI reading from Markit/Caixin seems to be at odds with the official reading, since the December reading improved from 50.9 to 51.9, which is the best reading since January 2013.
  • The PMI report from Markit/Caixin also noted that production rose further, which contradicts the slower growth reported by the official PMI report from NBS.
  • Both manufacturing PMI reports agreed that job shedding in the manufacturing sector continued, though.
  • As for the service PMI reading from Markit/Caixin, it improved from 53.1 to 53.5 in December, which is the best reading since December 2014.
  • The higher reading was due an increase in new orders.
  • Total industrial production in China grew by to 6.0% year-on-year in December.
  • This is slower than November’s +6.2% and is the weakest reading in five months to boot.
  • The weaker increase was mainly due to weaker production from manufacturing (+6.3% vs. +6.7% previous), as well as electricity, gas, and water production (+8.0% expected, +9.9% previous).
  • Manufacturing output has been trending lower, with December’s reading of +6.3% being a record low since comparable records began in 2003.
  • Mining was still a drag, albeit less so (-2.5% vs. -2.9% previous).

Consumer Sentiment & Spending

  • For the December period, China’s official consumer confidence index eased from the 19-month high of 108.6 to 108.4.
  • On a more upbeat note, December’s reading is still above the 100.0 neutral level.
  • Moreover, December reading is the second highest reading in 19 months.
  • The slight dip in consumer confidence apparently had an effect on consumer spending since retail sales in December only increased by 0.89% (+0.97% previous).
  • Year-on-year, however, retail sales increased by 10.9%, which is the best reading since December 2015.
  • Also, the annual reading has been improving for two straight months already.


  • China’s dollar-denominated trade surplus in December was $40.82 billion, missing expectations that it would widen to $46.50 billion.
  • Furthermore, this is narrower than the previous month’s surplus of $44.61 a.
  • The smaller surplus was due to exports falling by 6.1% month-on-month while imports increased by 3.1%.
  • Year-on-year, exports plunged by 6.1% after an anemic 0.1% increase in November.
  • Exports have been in negative territory 10 months out of 12 in 2016.
  • Also, total exports for the entire year fell by 7.7%, which marks the second year of slumping exports.
  • Imports, meanwhile, 3.1% year-on-year in December.
  • Imports have been in negative territory 9 months out of 12 in 2016, which counterbalanced the contraction in exports and allowed China to print in print a surplus throughout the year.
  • For the whole year, imports fell by 5.5%, thanks primarily to cheaper commodities.

China's Economy: Growth

China's Economy: Inflation

China's Economy: Business Conditions

China's Economy: Consumer Spending & Sentiment

China's Economy: Trade

Putting it all together

China’s Q4 GDP was within the PBoC’s target range of 6.5% – 7.0%, so no biggie there. However, GDP for the entire year is the weakest in 26 years, which is rather disappointing. And while PMI readings show that the manufacturing sector is still pretty upbeat, annual manufacturing output in December was the weakest on record since comparable records began in 2003. This is likely the reason why China’s exports fell by 7.7% for the entire year despite constant devaluation of the yuan. It just so happens that imports also fell hard, allowing China to print a surplus.

Anyhow, China’s economy seems to have stabilized, even as the manufacturing sector continues to contract. So, 2016 seems to be a somewhat good start to China’s so-called “13th 5-year plan” for 2016-2020. Speaking of the 13th 5-year plan, the said plan wants to shift the Chinese economy from a heavy-industry dependent, export-driven economy to one that’s driven more by domestic demand and a cyber-economy.

And there are signs to that end. For one, retail sales have been climbing on yearly basis, with the reading for December being the highest since December 2015. Also, fixed asset investments in China continue to grow at a steady rate, which would definitely help ease the transition. China does have a problem with inflation, though, with December’s 2.1% reading missed PBoC’s 3% target by a very wide margin. Still, there are some optimistic signs in that the core reading continues to trend higher.