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Data Flash is a brief interpretive summary of China’s official monthly economic data release.
2016 ended with strong economic data, including an uptick in GDP growth in Q4 and accelerated retail growth in December. However, our short-term outlook remains unchanged, and we expect a modest slowdown to resume in 2017, probably by mid-year. We do not expect a sudden meltdown; our LEI for China suggests that the current growth momentum in industrial production should continue at least into spring. Nevertheless, with diminishing growth support from monetary policy and the housing market, growth headwinds are gathering.
Probable turbulence in US-China trade relations requires planning attention, with full consideration for downside scenarios. Some of the more extreme measures articulated by the Trump team, while not anticipated, could provoke shocks to the Chinese economy and accelerate slowing.