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China Facing Sluggish Start for New Year China’s Economy Faces Sluggish Start for New Year
(about 3 hours later)
BEIJING — After a rough 2014, China, the world’s second-largest economy, appeared to be starting the new year on a weak note, reinforcing expectations that Beijing will roll out more stimulus measures to avert a slowdown that could cause job losses and debt default.BEIJING — After a rough 2014, China, the world’s second-largest economy, appeared to be starting the new year on a weak note, reinforcing expectations that Beijing will roll out more stimulus measures to avert a slowdown that could cause job losses and debt default.
China’s factory activity is sputtering, underlining the challenges facing the country’s manufacturers as they fight rising costs and softening demand in a cooling economy. In addition, a property slump is expected to last well into 2015, companies continue to struggle to pay off debt, and export demand may remain erratic, leaving the services sector as China’s lone economic bright spot.China’s factory activity is sputtering, underlining the challenges facing the country’s manufacturers as they fight rising costs and softening demand in a cooling economy. In addition, a property slump is expected to last well into 2015, companies continue to struggle to pay off debt, and export demand may remain erratic, leaving the services sector as China’s lone economic bright spot.
The nation’s official purchasing managers index slipped to 50.1 in December from 50.3 in November, a government report showed on Thursday — its lowest level of the year, clinging just above the 50-point level that separates growth from contraction on a monthly basis.The nation’s official purchasing managers index slipped to 50.1 in December from 50.3 in November, a government report showed on Thursday — its lowest level of the year, clinging just above the 50-point level that separates growth from contraction on a monthly basis.
“This indicates that industrial growth is still in a downward trend, but the pace is slowing,” Zhang Liqun, an economist at the Development Research Center, said in a statement accompanying the report.“This indicates that industrial growth is still in a downward trend, but the pace is slowing,” Zhang Liqun, an economist at the Development Research Center, said in a statement accompanying the report.
A similar private survey on Wednesday showed that activity in December shrank for the first time in seven months. That survey focused on smaller companies, which are under greater strains.A similar private survey on Wednesday showed that activity in December shrank for the first time in seven months. That survey focused on smaller companies, which are under greater strains.
Many analysts expect economic growth in the fourth quarter to slow only marginally from 7.3 percent in the third quarter, though weak data suggest that may be too optimistic. If full-year growth is less than the government’s 7.5 percent target, it would be the weakest expansion in 24 years.Many analysts expect economic growth in the fourth quarter to slow only marginally from 7.3 percent in the third quarter, though weak data suggest that may be too optimistic. If full-year growth is less than the government’s 7.5 percent target, it would be the weakest expansion in 24 years.
Economists who advise the government have recommended that China lower its growth target to around 7 percent in 2015.Economists who advise the government have recommended that China lower its growth target to around 7 percent in 2015.
On Nov. 21, in a bid to spur growth and keep borrowing costs down, the central bank unexpectedly cut interest rates for the first time in more than two years. It has also injected more funds into the banking system in recent months and relaxed restrictions to persuade risk-averse banks to lend more.On Nov. 21, in a bid to spur growth and keep borrowing costs down, the central bank unexpectedly cut interest rates for the first time in more than two years. It has also injected more funds into the banking system in recent months and relaxed restrictions to persuade risk-averse banks to lend more.
In addition, the economic planning agency has been approving more infrastructure projects.In addition, the economic planning agency has been approving more infrastructure projects.
While its recent moves may have bought the central bank some time to see if conditions improve, many economists still expect more interest rate cuts as well as reductions in banks’ required reserve ratios this year, perhaps as soon as the first quarter.While its recent moves may have bought the central bank some time to see if conditions improve, many economists still expect more interest rate cuts as well as reductions in banks’ required reserve ratios this year, perhaps as soon as the first quarter.