China in slowdown as retail and investment fall to multi-year lows
CHINA'S economy slowed markedly in the first two months of the year, with growth in investment, retail sales and factory output all falling to multi-year lows – a surprisingly weak performance that raises the spectre of a sharper cooldown.
The weaker-than-expected data is bound to amplify global investors' worries about slackening growth in the world's second-largest economy, and will almost certainly feed speculation that Beijing may loosen policies soon to bolster growth.
China's industrial output rose 8.6pc in the first two months of 2014 from a year earlier, the National Bureau of Statistics said yesterday, missing market expectations for a 9.5pc rise. That marked the worst performance for China's factory output growth since April 2009.
"Policy easing should be imminent," said Hao Zhou, an economist at ANZ Bank in Shanghai, adding that yesterday's data implied that China's economy may grow 7pc in the first quarter.
Sources told Reuters earlier this week that China's central bank is prepared to take its strongest action since 2012 to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves.
A cut would be triggered if growth slips below 7.5pc and towards 7pc, and would be expected only in the second quarter, according to the sources who are involved in internal policy discussions.
Other sectors of the economy also appeared to have lost steam.
The statistics bureau released combined data for January and February in a bid to reduce distortions seen in single-month data caused by the timing of the Lunar New Year holidays, when factories, offices and shops often close for long periods.
Trade data last week showed January-February exports fell 1.6pc from the same period a year earlier, and tumbled 18.1pc in February alone, alarming financial markets.
Many analysts believe Beijing will not consider further easing until more months of data are available.