China's economy maintains momentum in challenging conditions



China's economy maintains momentum in challenging conditions

China Economic Quarterly, Aug 2016

The China Economic Quarterly is a market outlook prepared on a quarterly basis by PwC to share the latest economic and policy updates. In this inaugural issue, we provide an analysis of major economic indicators in China for the first half of 2016, summarise the main policy developments and discuss hot topics of interest including features on the future trajectory of the renminbi (RMB) and the implications of Brexit for Chinese investors.

According to key economic data released by China's National Bureau of Statistics for the first half of 2016, China's economy expanded 6.7 percent year-on-year in the second quarter of 2016, holding steady from the first quarter and meeting market expectations.

Here are the key findings:
  • Investment in infrastructure and real estate sector has picked up and this may help boost economic growth in 2016, however, the supply-side structural reform is essential for sustainable economic growth.
  • Private investment, a key driver of economic growth, has slowed down amid stimulus efforts in the public sector and state-owned enterprises (SOEs).
  • The renminbi (RMB) will remain comparatively stable against major currencies for the rest of 2016.
  • Brexit provides unique opportunities to Chinese investors with attractive valuations of UK assets - although investors would be well served to have robust risk mitigation plans.