China started the new year in a strong way

The Chinese economy is investing again in 2017, the latest data from the Statistics Bureau shows. The first two months of 2017 saw China's fixed capital investment rise 8.9 % compared to the same period last year, which was also above expectations of 8.2%. Most of this came from the public sector, where investments grew 14.4%. Private-sector investment, which constitutes 60% of the total investment, increased by 6.7% from a year ago, the highest growth rate in a year. 

"Today's data appeared to be mainly driven by infrastructure spending and a rebound in the real estate sector," said Zhou Hao, a Singapore-based economist at Commerzbank.

To be sure, the public sector is still growing faster. State-owned enterprises are still investing at Beijing’s bidding and with poor returns. Public sector investment grew 14.4% from a year ago. Infrastructure spending increased by 10%.

But OCBC and many other China watchers expect that pace will begin to slow starting in spring as the payoff from last year's stimulus spree begins to fade.
"This strength remains heavily reliant on rapid investment growth that will be difficult to sustain given clear signals that the fiscal and monetary policy stance will be less supportive this year," says Julian Evans-Pritchard, a Singapore-based China Economist at Capital Economics.

China's economic outlook is also being clouded by increasing fears of protectionism under U.S. President Donald Trump.
Trump plans to host President Xi Jinping at a summit next month, according to media, as his administration seeks to smooth relations which have got off to a rocky start.