China 2016 economic growth seen slowing to 6.6 percent, 6.5 percent in 2017: Reuters poll

Mon Oct 17, 2016 12:08am EDT
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By Kevin Yao

BEIJING (Reuters) - China's economic growth is expected to cool to 6.6 percent this year and slow further to 6.5 percent in 2017, even as the government keeps up policy support to help ward off a sharper slowdown, a Reuters poll showed.

The world's second-largest economy faces nagging downward pressure due to slack global demand that has hurt its exports, as well as risks from painful reforms to cut industrial overcapacity and a growing pile of debt that some analysts fear could spark a financial crisis.

The risk of a correction in the high-flying property sector could also pose a threat as more local governments rush to restrict home purchases to cool surging house prices and ward off housing bubbles.

While fears of a hard landing appear to have eased, recent data also have highlighted growing imbalances in China's economy, with growth increasingly reliant on government spending as private investment falls to record lows.

"The downside risks to growth remain larger, though, and they can be manifested in a weaker-than-expected property sector or external demand," economists at HSBC said in a note.

"In addition, the slowdown in private sector investment over the past years means that the organic growth momentum of the economy may have declined, requiring policymakers to be more vigilant in terms of keeping policies as supportive as possible."

Last month, the World Trade Organization cut its forecast for global trade growth this year by more than a third to 1.7 percent, reflecting a slowdown in China and falling levels of imports into the United States. [nL8N1C3112]

Still, the median forecast in a Reuters survey of 59 economists was slightly better than a poll in July, when economists penciled in 2016 growth of 6.5 percent and 6.3 percent for 2017.   Continued...

China's national flag is seen in front of cranes on a construction site at a commercial district in Beijing, China, January 26, 2016. REUTERS/Kim Kyung-Hoon