China will slowly move to target risks instead of GDP

Significance

China's economy grew by 6.9% year-on-year in the April-June quarter of 2017, in line with the 6.5-7.0% target. Marked growth in exports drove GDP expansion and combined with higher producer prices and profitability to encourage domestic activity. At the Financial Work Conference on July 14-15, President Xi Jinping committed to tackling the financial risks.

Impacts

• Above-target growth creates scope for more measures to reduce financial risks.
• Higher profitability, helped by rising factory-gate prices, should help to reduce the reliance on debt.
• China's central bank governor, an outspoken reformer, is expected to announce his retirement soon; his successor's role will be crucial.