Chinese economic growth picks up for first time in two years

There is renewed concern for rising debt levels in the Chinese economy after it posted growth numbers for the final quarter of 2016 that beat expectations.

The world's second largest economy said gross domestic product (GDP) of 6.8% - an annualised rate - was achieved in the three months to December - the first quarterly pick-up in growth for two years.

It meant, the country's statistical bureau said, that growth of 6.7% was achieved during 2016 as a whole.

That was its lowest level for 26 years and the data betrayed the extent to which the final quarter performance was driven by fiscal spending and investment by state corporations amid record levels of bank lending.

The country has relied on massive levels of credit to soothe its transition from an economy rooted to trade towards a more consumer-led model.

UBS analysts said China's debt to GDP ratio rose to 277% by the end of 2016 from 254% the previous year - with an increasing share of new credit being eaten up by existing debt-servicing costs.

Its efforts to remodel the economy were also hampered during the year by a flat picture for wage growth and evidence of an even greater gulf in inequality.

Exports fell 7.7% in 2016 as overseas demand remained weak.

Experts warned that the prospect of a trade war with the US - a result of threats by incoming US president Donald Trump to raise tariffs on Chinese goods - was among the biggest risks to China's economy in the current year.

Director of the National Bureau of Statistics in Beijing, Ning Jizhe, told reporters on Friday: "I am hopeful that after his election, President Trump will consider the issue from the angle of mutual benefit and win-win and will develop the long-term, cooperative 'big country' relations that have been formed between China and the United States,"

He added that China should maintain "medium to high-speed growth", with the country's leadership expected to allow growth of between 6-6.5% in 2017 amid efforts to contain debt levels, which he insisted were manageable despite warnings to the contrary by bodies such as the International Monetary Fund.

It also emerged on Friday that the central bank, the People's Bank of China, had agreed to relax bank liquidity restrictions to allow for a greater demand for credit ahead of the Chinese New Year holiday.

Bill Adams, senior economist at US-based PNC Financial Services Group, also cited strong capital outflows from China because of a weak yuan currency as being a major area for concern.

He told the Reuters news agency: "The key risk to the Chinese economy in 2017 and 2018 is the possibility that faster than expected US interest rate increases could intensify Chinese capital outflows and increase stresses on China's financial system."