The economy rebounded strongly in 2016/17 following a good monsoon, reconstruction efforts after the 2015 earthquake and normalization of trade with India. The GDP growth estimate of 6.9 percent demonstrates optimistic growth outlook at least in the short term. 4.
If dollar purchases by the central bank were not routinely sterilized, the money supply might increase more than desired, possibly leading to an overheating of the economy and inflation. To date the PBOC has been largely successful in its sterilization operations, but if it continues to use this strategy it will eventually encounter problems.