China’s economy set to come under pressure as it fights ‘critical battles’
Beijing has identified fighting debt, poverty and pollution as it priorities in 2018, but they are unlikely to be its only challenges, experts say
China’s economy begins 2018 facing what its leaders have called three years of “critical battles”.
Those fights to tackle domestic debt, poverty and pollution pose a hat-trick of risks to the world’s second-largest economy even before higher interest rates and trade war threats from the United States are taken into account.
While the nation is starting from a position of strength, with full-year growth in 2017 poised for its first acceleration since 2010, the expansion is expected to slow in 2018.
As a result, the government of President Xi Jinping is signalling that it is sanguine about more modest economic performance, if progress on the top risk – financial fragility – can be made.
“Significant economic imbalances continue to create downside risk to the outlook for 2018,” Rajiv Biswas, chief Asia-Pacific economist at IHS Markit in Singapore, said. “Risks to the Chinese economy will remain among the key risks to the global growth outlook in 2018, with the Asia-Pacific region particularly vulnerable to the shock waves from a slowdown.”