China's economic performance exceeds market expectations in the 2017, but will the bullish moment continue in the new year? A moderation in GDP growth is the widespread belief among global investors given a high benchmark, while a more balanced and sustainable economy should take shape more rapidly. The Chinese economy has totaled 82,7 trillion yuan (about 13 trillion US dollars) in volume in the 2017, with an increase of 6,9 percent, for the first time in seven years. Stronger than expected growth data may indicate a further tightening of macro-prudential policy, but this does not change the economic trade in Nomura's stock exchange for China this year.
It has increased its 2018 0,1 GDP growth forecast percentage points to 6,5 percent, with a gradual slowdown in growth over the coming quarters. Global investment banks JP Morgan and UBS expect the Chinese economy to expand 6,7% and 6,4% respectively this year. The real estate sector remains one of the main uncertainties of China's economic growth in the 2018. This year neither a collapse nor a loosening of the management of the real estate market is expected, but government policies that include housing support and a quicker-than-expected legislative progress for property tax could complicate market sentiment, according to Zhu Haibin, chief economist of China JP Morgan. UBS economist China Wang Tao estimates that real estate sales may lose momentum in the 2018, while real estate investments and construction growth will remain solid or only moderate modestly until the end of this year. Meanwhile, while government environmental protection and cleanup efforts come into full force during the heating season, industrial production and related investment activities are expected to ease more visibly in this quarter, Wang said. Externally, the normalization of monetary policies in developed economies could affect the exchange rate and equilibrium of the flow of capital, while the more protectionist practices of the United States could dampen Chinese exports. Cross-border Chinese capital flows reached a turning point in the 2017, while the foreign exchange reserves stabilized after two years of decline. Zhu estimated that the basic balance of capital flow will continue in 2018 with a stronger yuan, a stable economy and an improvement in market sentiment due to efforts to control financial risk and other reforms. Better production investments and robust external demand due to the recovery of the global economy could help offset some of the weakness in the upstream sector, according to UBS. IRIS Pang, ING economist, believes that 2018 will be another positive year for China, supported by the consumption of goods and services and by infrastructure investments. ING predicts that the production of high-tech products and components will grow by more than 50 percent this year, mitigating the loss of production due to super-capacity cuts in non-ferrous metals, shipbuilding and building materials. The data for December and the fourth quarter indicate a dynamic of resilient growth, which according to Nomura was driven by a robust expansion of the services sector, as it continued to benefit from the Chinese economic rebalancing towards consumption and the "new economy" led by Internet. The new growth factors, including consumption and the service sector, have contributed more than 30% and 70% respectively to economic expansion and new jobs in the country, underlining the constant change in China's growth model .
