PMI easing reflects reforms slowing GDP

China's manufacturing activities in private and export-oriented companies grew in December at the slowest pace in three months, the latest evidence that structural reforms have slowed China's economic growth, a survey showed Thursday.

The HSBC Purchasing Managers' Index, which measures operating conditions in largely private companies, fell slightly to 50.5 from November's 50.8, according to HSBC Holdings Plc. The reading was flat from a flash reading released on December 16. A reading above 50 means expansion.

Qu Hongbin, chief economist for China at HSBC, said the decline was mainly due to slower output growth, but a steady increase of new orders kept the PMI in the expansion territory for the fifth consecutive months.

"The recovering momentum since August 2013 is continuing into 2014, in our view," said Qu. "With inflation still benign, we expect the current monetary and fiscal policy to remain in place to support growth."

The survey revealed the growth of both output and new orders fell from an eight-month high in November.

It was a similar situation in the state-owned companies.

The official PMI, released on Wednesday by the China Federation of Logistics and Purchasing, fell by 0.4 from November to 51 in December, the lowest in four months.

Zhu Haibin, chief China economist of JPMorgan, said the pace of industrial activity eased modestly toward the year-end from a peak in the third quarter, as policymakers shifted a focus on stabilizing growth in the third quarter to structural reforms in the fourth.

Zhu said China's gross domestic product growth may ease from 7.6 percent in 2013 to 7.4 percent this year.

"We look for a modest easing in investment growth, relatively solid consumption growth and some moderate upturn in the export sector, supported by the global economic recovery," the JPMorgan economist said.