China’s economic activity slows in Jan-Feb

IJI Reuters hina’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 specter of a sharper cooldown.

he weaker-than-expected data is bound to amplify global investors’ worries about slackening growth in the world’s secondlargest economy, and will almost certainly feed speculation that ei ing may loosen policies soon to bolster growth.

hina’s industrial output rose 8.6 percent in the first two months of from a year earlier, the ational ureau of tatistics said on hursday, missing market expectations for a . -percent rise.

hat marked the worst performance for hina’s factory output growth since pril .

“Policy easing should be imminent,” said Hao hou, an economist at ank in hanghai, adding that hursday’s data implied that hina’s economy may grow seven percent in the first uarter.

ources told Reuters earlier this week that hina’s central bank is prepared to take its strongest action since to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves.

cut would be triggered if growth slips below . percent and towards seven percent, and would be expected only in the second uarter, according to the sources who are involved in internal policy discussions.

ther sectors of the economy also appeared to have lost steam.

rowth in retail sales was the slowest in three years, up .8 percent in January and February compared to the year-ago period. nalysts had expected a rise of . percent.

Fixed-asset investment, an important driver of economic activity, fared even worse. It was up . percent in the first two months from the same period last year, a level unseen in years and some way below forecasts for a . - percent increase.

sian stock markets and most regional currencies such as the ustralian dollar and hina’s offshore yuan pared early gains after the data was released.

he 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 unar ew ear holidays, when factories, offices and shops often close for long periods.

rade data last week showed January-February exports fell .6 percent from the same period a year earlier, and tumbled 8. percent in February alone, alarming financial markets.

any analysts believe ei ing will not consider further easing until more months of data are available.

ut even accounting for holiday-related shutdowns and distortions, the broader weaker trend so far in appears clear.

hina’s government, which wrapped up its annual parliament meeting on hursday, had said last week that it aims to grow the economy by . percent this year.

ut with growth appearing to drop faster and sharper than what many have expected, some economists believe that hina may actually miss its growth target this year for the first time in years.

ven government officials are hinting that the target is not cast in stone, in what may be an attempt to guide market expectations lower. Finance inister ou Jiwei and Premier i e iang have both said that the target is flexible.