China’s gross domestic product (GDP) rose by 6.9% in 2017, reversing a downward growth trend for the first time since 2010 in an indication of strong resilience. In nominal terms, GDP rose by 11.2% to CNY82.7 trillion from CNY74.4 trillion in 2016, the National Bureau of Statistics (NBS) said. The strong performance is expected to give the government more room to tackle debt and financial risks in 2018, which President Xi Jinping said was a “critical battle” to fight.

Iris Pang, Chief Greater China Economist at ING, said the possibility of a “crisis” had been largely removed, but Beijing still needed to be cautious as it continued with its process of financial deleveraging. “The deleveraging is set to eliminate financial risks, but the authorities should not do it in haste as that could generate new risks,” she said. The GDP expansion meant China’s economy grew to about two-thirds the size of the United States’ last year, and at the current rate could overtake it within the next decade. The accelerated growth in 2017 is set to give President Xi Jinping fresh confidence in Beijing’s growth model. “In the current world, ‘democratic deficit’, ‘governance deficit’ and ‘development trap’ rise one after another, while problems like the rich-poor gap, terrorism and climate change keep emerging,” an article in the People’s Daily said. “The international political and economic system dominated by capitalism is flawed and needs deep reform. The new international order is budding. China’s practices offer a new choice to solve common problems facing all humankind.”

China’s per capita income rose 9% in 2017 to CNY25,974, the NBS added. Raymond Yeung, Chief Greater China Economist of ANZ Bank, said the current growth momentum was likely to continue in 2018 – with 6.5% growth forecast for the year – but the government would remain focused on reducing debt. “Risks to the economy, like debt, will be a top priority this year,” he said. Under “Xiconomics”, Beijing has downplayed GDP growth targets in favor of “quality” growth, sustainable development and greater transparency in auditing, as several provinces and cities have been found falsifying economic data, the South China Morning Post reports.

The services sector led growth with an increase of 8%, outpacing the industrial sector’s 6.1% and the agricultural sector’s 3.9%. Services continued to make up 51.6% of the country’s GDP.

Fixed-asset investment rose 7.2% year-on-year, down 0.9 percentage points from 2016. Private investment reached CNY38.15 trillion, up 6% year-on-year, 2.8 percentage points faster than the previous year, accounting for 60.4% of total investment. Online sales of physical goods rose 32.2% to CNY7.18 trillion, amounting to 15% of total retail sales, 2.6 percentage points higher than 2016. Earlier data showed China’s consumer inflation was 1.6% last year, cooler than the 2% for 2016, while the factory-gate prices rose for the first time in six years. Foreign trade recorded its first expansion in three years under strong domestic and external demand.

The Chinese government should lower the country’s expectations for gross domestic product growth and push forward reforms at state-owned enterprises (SOEs), both key for addressing China’s mounting credit and debt problem, according to Paul Gruenwald, Chief Economist at S&P Global Ratings. “Most of the debt is from the corporate sector, especially the SOEs,” he said. Gruenwald said the market should also play an essential role besides the government in containing excessive borrowing

For the first time the Chinese mainland has become a top five recipient of United States patents – behind the U.S., Japan, South Korea and Germany – according to a report by leading global patent consultancy IFI Claims Patent Services. The United States Patent and Trademark Office granted 320,003 patents in 2017, up 5.2% from the previous year. U.S. local companies received 46% of those patents, Asian companies 31% and European companies 15%.

Chinese mainland innovators were granted 11,241 U.S. patents last year. Although the number accounted for only 3.5% of the total, it still represented 28% year-on-year growth. “China is growing at an impressive rate,” said Larry Cady, Senior Analyst with IFI Claims. Bloomberg reported that the number of U.S. patents received annually by China increased tenfold over the past decade. IBM received more than 9,000 patents last year, making it the largest recipient for the 25th consecutive year. China’s Huawei Technologies ranked No 20 with 1,474 patent grants, the most among Chinese mainland companies. It was listed in the top 50 annual recipients for the first time in 2014.

The IFI Claims report also noted that Beijing-based display and sensing device developer BOE Technology Group was among those making the biggest increase among the top 50 recipients. It ranked No 21 last year with 1,413 granted US patents, up from No 40 in 2016. BOE Vice President Li Xinguo said Chinese companies were “making remarkable progress in high-tech innovation and international competitiveness”.

IFI Claims said eight technologies accounted for the biggest patent growth: e-cigarettes, 3-D printing, machine learning, autonomous vehicles, industrial moulding, hybrid vehicles, aerial drones and food, the China Daily reports.

China’s luxury market is expected to grow by low double digits in 2018 after posting the highest expansion in the past five years in 2017. Bain & Co said in its 2017 China Luxury Report that new consumers – those aged between 20 and 34 – were major contributors to the luxury market’s growth last year. Chinese spending in the domestic luxury market grew 20% to CNY142 billion last year, outpacing purchases overseas.

Luxury spending from China contributed 32% of the global luxury market over the past year, with renewed consumer confidence and narrowing price gaps for luxury goods between overseas and domestic markets contributing to the spending boom. Compared with mature consumers, millennials start purchasing luxury goods at an earlier age and buy more frequently. They purchased an average of eight times last year, compared with five times for other buyers. Cosmetics, women’s wear and jewelry were the top categories, with sales surging over 20% annually, surpassing the growth of other categories. “In response to the booming appetite of millennials, we’re seeing luxury brands repositioning themselves to better reach this influential demographic group, particularly through digital media that we know plays an influential role in shaping younger consumers’ opinions about luxury and fashion,” said Bruno Lannes, Partner at Bain’s China office and author of the report.

Although they saw a high growth rate, online channels only contributed to 9% of overall sales. That’s expected to continue to pick up in the future, with more brands planning to open their proprietary websites. The report said creating “newness” and offering innovative ideas will be important if brands hope to capture the new generation of consumers. Brands should also consider partnering with fashion icons and keep a “trendy” image to cater to the individualism of millennials, the Shanghai Daily reports.

Foreign direct investment (FDI) into the Chinese mainland soared to an all-time high of CNY877.56 billion in 2017, up 7.9% from 2016. The substantial rise in FDI illustrates the country’s continued efforts to improve the overall business environment for foreign investors, the Ministry of Commerce (MOFCOM) said in a statement. FDI into the high technology industry was notably strong, up 61.7% from a year earlier. “The steady momentum of FDI was attributed to government measures like easing restrictions in China’s 11 free trade zones (FTZs) and simplified procedures for investment,” said Tang Wenhong, Director General of the Ministry of Commerce’s Department of Foreign Investment Administration (FIA).

The number of newly established foreign companies rose to 35,652 last year, up 27.8% year-on-year. Foreign companies, which comprised less than 3% of the total firms operating in mainland China, contributed to a quarter of the country’s manufacturing business profits and one-fifth of tax revenue, according to MOFCOM. Last December, FDI into the Chinese mainland fell 9.2% year-on-year to CNY73.94 billion.

Non-financial outbound direct investment (ODI) in 2017 decreased nearly 30% year-on-year to USD120.08 billion. “The sharp decline reflects the effective reining in of irrational outbound investment,” said Li Guanghui, Vice President of the Chinese Academy of International Trade and Economic Cooperation in Beijing. Overseas investment in real estate, hotels, cinemas and entertainment has been limited, while investment in sectors such as gambling was banned. Outbound investment to countries and regions involved in the Belt and Road Initiative totaled USD14.36 billion in 2017, the China Daily reports.

The residential housing market in Shanghai continued to contract due to limited supplies and lending restrictions during the fourth quarter of 2017, according to real estate services provider JLL. The mass housing market and the luxury segment in the city recorded drops on a yearly basis. However, analysts expected the overall housing market in Shanghai to rebound slightly in 2018. Though the monetary policy will continue to remain tight, developers are likely to accelerate new launches in 2018 to ease rising cash flow pressures.

“Combined with the pent-up demand, sales may witness a slight rebound,” said Stephenie Zhou, head of project sales for JLL Shanghai. “However, prices are likely to be largely flat as policy restrictions are still in place,” she added. Lu Wenxi, Analyst with Shanghai Centaline Property, said that buyers are also becoming more rational. “Buyers are comparing the price and location of properties carefully. In the past, buyers would flock to projects with price appreciation out of fear that they would no longer be able to afford them if they wait. Those kind of buyers have disappeared”, said Lu.

Tight lending combined with limited supply and restrictive policies helped limit mass market sales to 8,851 units, down 47% year-on-year, while high-end sales fell to 150 units, down 19% quarter-on-quarter and 80% year-on-year. Despite slow sales through the year, inventory remained low at the end of 2017 due to limited supply. High-end inventories fell about 6% quarter-on-quarter and 27% year-on-year. As a result, prices stayed firm even with the slowdown in sales, the China Daily reports.

Housing markets in China’s 15 major cities were generally stable for another month in December as differentiated rein-in policies to curb speculation continued to take effect. Four of the 15 cities, including first-tier ones and key second-tier cities, saw decline in new home prices from November. Prices in three cities were flat from a month earlier, and the remaining eight posted month-on-month growth.