GDP Growth Accelerates, FDI Levels Robust, and Avocado Sales Booming – China Market Watch
China’s GDP growth accelerates for first time since 2010
China’s GDP grew by 6.9 percent in 2017, according to the National Bureau of Statistics. In nominal terms, GDP increased by 11.2 percent to reach a total value of RMB 82.7 trillion (US$12.86 trillion). The 6.9 percent growth rate outperformed the official GDP growth target of “6.5 percent, or higher if possible in practice”.
The stronger-than-expected performance brings to an end six consecutive years of declining GDP growth rates. In 2016, China’s GDP grew at 6.7 percent – its slowest rate in 26 years.
Analysts have attributed the impressive growth rate to government infrastructure stimulus, consumer spending, a hot property market, and a recovery in overseas demand for Chinese products. The growth comes in spite of a year-long crackdown on debt accumulation and financial risk, as well as a campaign to reduce pollution.
The higher growth rate brings the Chinese Communist Party closer to its promise to double 2010 GDP and per capita income by 2020, and also gives the government more leeway in implementing economic reforms and restructuring. Analysts expect the government to announce a 2018 GDP growth target of “around 6.5 percent” at the Two Sessions meetings in March.
FDI in China rises 7.9% in 2017
Foreign direct investment (FDI) into China rose 7.9 percent year-on-year in 2017 to reach a total of RMB 877.56 billion (US$136.33 billion), according to a statement from the Ministry of Commerce. The FDI performance is a marked improvement over 2016, when FDI increased by only 4.1 percent.
An impressive number of companies entered the Chinese market in 2017, with 35,652 new foreign companies established in 2017 – a 27.8 percent increase over 2016. FDI in high-tech was particularly strong, as investments in the sector rose 93.2 percent year-on-year, for a total of RMB 184.65 billion (US$28.79 billion).
The Chinese government introduced a number of measures to attract FDI in 2017, partially in response to increased competition from low-cost jurisdictions such as India and Vietnam for attracting FDI. The government liberalized market access with the new Catalogue for the Guidance of Foreign Investment Industries and the Free Trade Zone Negative List, and implemented administrative reforms to cut red tape and improve the business environment.
Avocado sales could more than double in 2018
Mission Produce, the world’s largest distributor of avocados, has stated that avocado sales to China could more than double in 2018, per a report from CNBC.
Avocados have exploded in popularity in China in recent years, as young middle and upper class consumers in first tier cities such as Shanghai, Beijing, and Guangzhou grow a taste for the foreign fruit. Avocado exports from Latin America have been growing by around 250 percent per year, increasing from only 154 tons in 2012 to over 25,000 tons in 2016.
Although China’s avocado market still pales in comparison to that of the US – Mexico alone shipped over 800,000 tons to the US in the 2016-17 season – it is a rapidly growing market for avocado producers with considerable room for further growth. For overseas consumers, however, China’s newfound interest for avocados may result in higher prices for the fruit as producers struggle to meet increased demand.
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