China’s real GDP growth likely remained at 6.7 pct in Q4, activity growth to have stayed positive

China’s real GDP growth is expected to have come in at the same pace in the fourth quarter of 2016. According to a Societe Generale research report, the country’s economy is likely to have grown 6.7 percent year-on-year once again in the December quarter as it has in every other quarter in 2016. But, the nominal growth is anticipated to have accelerated to 9.5 percent year-on-year in the last quarter of 2016 from the 7.8 percent year-on-year growth recorded in the third quarter. This is because of a likely stronger deflator of 2.6 percent year-on-year amidst the sharp rise of PPI to 3.3 percent in the fourth quarter from -0.8 percent in the third quarter.

Meanwhile, the activity growth is expected to have continued with its positive momentum in December. The industrial output growth is likely to have accelerated slightly to 6.3 percent year-on-year in December from 6.2 percent in the previous month, as shown by the strong manufacturing PMI readings and resilient trade growth.

“We expect fixed asset investment growth to have rebounded decisively to 10 percent yoy from 8.3 percent yoy in November, pushing up the year-to-date growth by two ticks”, stated Societe Generale.

This was partially due to markedly positive base effects on infrastructure and manufacturing investment. Residential investment possibly did not slowdown significantly in December, given solid land sales and just modest deceleration in mortgage growth in the month. But retail sales growth possibly slowed in nominal terms to 10.6 percent year-on-year from 10.8 percent and in real terms to 9 percent year-on-year from 9.2 percent year-on-year, added Societe Generale.