China's growth edges up but 2016 weakest year since 1990

By JOE McDONALD - AP Business Writer ,

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Workers buy their lunch outside a construction site at the Central Business District in Beijing.

Workers buy their lunch outside a construction site at the Central Business District in Beijing. (Photo: AP)

BEIJING (AP) — China's economic growth accelerated slightly in the final quarter of 2016, shored up by government spending and booming real estate sales, but its full-year performance still was the weakest in nearly three decades.

The world's second-largest economy expanded by 6.8 percent over a year earlier in the three months ending in December, up from the previous quarter's 6.7 percent, the government reported Friday. Full-year growth was 6.7 percent, down from 2015's 6.9 percent and the weakest since 1990's 3.9 percent.

The Chinese economy has cooled steadily as communist leaders try to steer it to more sustainable growth based on domestic consumption instead of trade and investment.

Beijing has relied on repeated infusions of credit to prevent activity from slumping too fast, prompting warnings the country's rapid run-up in debt could lead to a financial crisis or drag on growth.

Chinese leaders have cautioned that the country's economic performance in the near future will be "L-shaped," meaning the downturn is likely to end but growth is unlikely to rebound.

The latest growth was supported by an 18.7 percent surge in investment last year over 2015 by government-owned companies in factories and other fixed assets. Investment by private companies was far weaker at 3.2 percent.

Real estate sales have surged, pushing up economic growth figures. But regulators are taking steps to cool a jump in housing prices and bank lending, which forecasters say is likely to depress this year's performance.

This week, the International Monetary Fund raised its China growth forecast for this year by 0.3 percentage points to 6.5 percent but warned rising debt increases the risk of a sharper slowdown.

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