The staff of Fortune is assembling its predictions for 2017 in our annual feature, the Fortune Crystal Ball, now on newsstands in the December 1 issue of the magazine. Here’s one of our forecasts.
Make no mistake, when President Xi Jinping last year called for GDP growth of at least 6.5% for the coming five years, China was signaling it would prop up growth by whatever means necessary.
Recently that meant a flood of debt the likes of which China has never seen. The domestic debt ratio rose by an astonishing 28% of Chinese GDP in the 12 months through June, a faster pace than even China’s 2008-09 stimulus boom, according to Emerging Advisors Group. Banks are under pressure to lend and Chinese companies are piling on debt.
As a result, real estate prices are up, GDP growth is hitting targets (though actual growth will be at least a full percentage point below the government’s official releases), and consumers are spending.
The boom can’t go on forever, but can for the short term.
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A version of this article appears in the December 1, 2016 issue of Fortune with the headline “China Keeps Booming.”