OPEC Monthly Oil Market Report – November 2017
In 3Q17 the moderation of the headline GDP growth rate reflected a downturn in secondary sector output
covering industry and construction, which slowed from 6.1% in 1Q17 and 2Q17 to 6.0% in 3Q17. Services
growth reaccelerated to 8% y-o-y following two consecutive quarters of decline in 1Q17 and 2Q17, owing to
robust growth in transportation, information, software, and leasing services, according to the monthly index of
service sector growth, which grew 8.3% in the first three quarters.
Chinese Communist Party's 19th Party Congress
concluded on 24 October 2017 with the formal
election of the party's Executive Committee and it’s Standing Committee. Beijing says it is planning to pay
less attention to the economic growth side of the equation in its struggle to balance rapid development
versus the increasingly serious environmental problems. By de-emphasizing numeric goals, the government
will have more room in managing the economy.
In terms of China’s monetary policy,
growth declined in September to 9.2% y-o-y, still above
GDP growth, but much lower than the 10-year average.
nonfinancial corporate debt
-to-GDP declined from 99.2% in 2016 to 94.5% in 3Q17. The recent
credit tightening has reduced flows to non-bank financial institutions and investment products, but the impact
on overall non-financial sector debt has been modest so far.
Domestic economy debt
204.2% of GDP in 4Q16 to 226.8% in 3Q17. Nonfinancial corporate debt accounts for around 40% of total
nonfinancial sector debt, but its growth rate has slowed down to 5% y-o-y in the 1H17. However,
has expanded rapidly, rising 11% y-o-y in 1H17, while China recorded government debt equivalent to
46.2% of the country's GDP in 3Q17.
Graph 3 - 25: China’s money supply (M2)
Graph 3 - 26: China’s outstanding debt ratios
China’s foreign reserves
have increased back above US$3 trillion, and capital outflows have stabilised in
1H17. The Chinese yuan has appreciated by 3.5% against the US dollar in 1Q17, 2Q17 and 3Q17. However,
the real exchange rate (RER) against all of China’s trade partners has continued to depreciate. Despite an
increase in capital outflows in 2016-2017 and the resulting devaluation, the Chinese RER is still significantly
above its average for the last 10 years. In general, the exchange rate has appreciated significantly since
2007, and the current account balance has declined substantially. This to a large degree reflects the growing
focus on economic expansion through higher domestic demand and a more consumption-oriented economy
with a lower savings rate.
surplus fell sharply to $28.47 billion in September from $40.94 billion in the same month a year
earlier. It was the smallest trade surplus since March, as imports jumped 18.7 % y-o-y to $169.79 billion,
accelerating from 13.3% a month earlier. Exports rose at a slower 8.1% to $198.26 billion.
Chinese money supply (LHS)
% change y-o-y (RHS)
Sources: People's Bank of China and Haver Analytics.
Nonfinancial corporate debt
Domestic economy debt
Sources: China National Bureau of Statistics and
% of GDP