China factory activity drops
January 1, 2015
China's official Purchasing Managers' Index (PMI) came in at 50.1 in December, down from 50.3 in November. It's the weakest reading in 2014. A figure above 50 signals expansion, below 50 shows a contraction.
The National Bureau of Statistics (NBS), which released the data on Thursday, said "growth momentum is still insufficient" due to weak domestic demand, a slump in the property market, and tepid demand for its products abroad. The services sector remains the one bright spot in the economy.
Given the weak data, Beijing is expected to roll out more stimulus measures to prevent an even sharper slowdown.
In late November, the central bank unexpectedly #link:18078621:cut interest rates for the first time in more than two years. It has also injected more funds into the banking system and relaxed restrictions to persuade risk-averse banks to lend more. More infrastructure projects have also been approved.
Many analysts expect economic growth in the fourth quarter to slow only slightly from 7.3 percent in the third quarter. It means full-year growth will undershoot the government's 7.5-percent target and mark the weakest expansion in 24 years.
Economists advising the government have recommended that China lower its growth target to around 7 percent in 2015.
ng/bk (Reuters, AFP, dpa)