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Weak Data Signal China Slowdown


China's industrial production, retail sales and fixed investment grew less than expected in the first two months of 2014, underscoring the moderate slowdown in the region as measures to clamp down credit suppressed investment.

Industrial production increased 8.6 percent year-on-year in the January to February period, the National Bureau of Statistics said Thursday. Production was forecast to grow 9.5 percent, following a 9.7 percent rise in December.

Another report from the statistical office showed that retail sales grew by a double-digit 11.8 percent year-on-year during the two months, which was weaker than the 13.5 percent increase forecast by economists.

Further, urban fixed asset investment during January to February increased 17.9 percent from the last year, which was also slower than expectations for 19.4 percent.

The government targets 17.5 percent fixed asset investment growth for the whole of 2014, after it advanced 19.6 percent in 2013.

Nonetheless, economic data in January and February are usually distorted by the Lunar New Year holiday.

Despite this broad evidence of a slowdown, Julian Evans-Pritchard at Capital Economics does not think policymakers will necessarily step in to support growth.

This will inevitably mean that growth will continue to slow over the coming months but the economist believes that policymakers are comfortable with a moderate slowdown, the economist said.

At a press conference earlier today, China's Premier Li Keqiang said the government's 7.5 percent economic growth target for 2014 is flexible. Job creation and income generation are the key determinants of policies, he said.

He observed that China's government debt to GDP is below international averages and risks are under control.

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