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Weak data may lead to easing measures: economist

Xinhua, December 15, 2014 Adjust font size:

Relatively weak economic data released on Friday have made it more likely that policymakers will take more easing measures, according to a Deutsche Bank economist.

The remarks were made by Zhang Zhiwei, chief China economist of Deutsche Bank, after the National Bureau of Statistics published weaker industrial output, investment and retail figures for November.

China's industrial output grew 7.2 percent year on year in November, the second lowest since April of 2009, with only August of this year reporting a lower rate.

Industrial production accounted for 44.2 percent of China's total GDP in the first nine months of 2014, making it one of the best leading indicators for GDP growth.

"Without significant policy easing, the weak momentum in the economy will likely persist," said Zhang in a research note sent to media.

In the third quarter, growth slid to a low of 7.3 percent, a level not seen since the 2008/2009 global financial crisis, dragged down by a housing slowdown, softening domestic demand and unsteady exports.

In the month, investment, especially in the property sector, continued to slide, with leading indicators such as new starts and land sales weakening further.

"This suggests to us that developers' outlook for the sector remains cautious, hence we may not see a sustainable recovery in investment, at least in the first half of 2015," Zhang said.

The economist expects the Chinese government to cut the reserve requirement ratio (RRR) by 50 basis points in the first and second quarter of 2015, and further cut interest rates later in the year.

The central bank cut the benchmark interest rates in late November, the first such move in more than two years.

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