The Chinese economy in 2017

The 2016 Chinese GDP grew 6.7 per cent and such growth rate comfortably met the Chinese government annual target. This is great news for the current Chinese economy and the worrying hard landing of the Chinese economy did not happen in 2016. However, 2017 could be another challenge for the Chinese economy, as the new US President Trump has been hostile towards China. In addition, the structure of the Chinese economy determines that any factor affecting the Chinese exports could make a huge impact on the entire economy, as more than 25 per cent of the Chinese economic outputs came from exports. Exporting industries are mainly labour-intensive industries; therefore, a decrease in the exports could create a significant increase in the national unemployment rate.

The US has been the largest market and economy in the world and an important trade partner with China. The new president could possibly lead to a trade war, which could definitely affect the Chinese economy. In addition, if the imports into the US are controlled by policies, China cannot use its monetary policies to influence its currency's exchange rate in order to affect the exports. If the imports into the US are decreased by the depreciating US dollar, then China may be able to use the monetary policies to re-determine its trade position with the US. Both strategies could be taken by the US government, as one could have a monetary policy that can be used for other purpose, the other could give US industries more advantages in the world economy. Therefore, it is possible for the US government to use both strategies to decrease the Chinese exports to the US.

The high debt level still exists in the Chinese economy; based on all factors, 2017 is going to be another challenging year for China. However, the US may become more isolated with other parts of the world economy, it may give more opportunities for many Chinese companies to gain more market shares around the world.