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Chinese Industrial Output Growth Slowest Since 2008

chinamanufacturing 031416

China's industrial production grew at the slowest pace since the financial crisis and retail sales rose at a slower pace at the start of the year, adding pressure on policymakers to roll out new measures to kick start economic activity.

Industrial production expanded 5.4 percent in January and February, which was slower than the 5.9 percent increase seen in December, data published by the National Bureau of Statistics showed over the weekend.

This was the weakest growth since late 2008. Economists had forecast 5.6 percent growth for January to February.

Retail sales growth for the first two months of 2016 came in at 10.2 percent compared to 11.1 percent growth registered in December. The increase was slower than the consensus estimate of 11 percent growth and was the slowest since May 2015.

The NBS publishes combined data for January and February to avoid distortion caused by the timing of Chinese New Year.

Fixed asset investment gained 10.2 percent from the same period of last year. In 2015, FAI climbed 10 percent.

However, Julian Evans-Pritchard, China economist at Capital Economics, said the decline in industrial production was entirely due to a sharp fall in tobacco output and retail sales growth has always taken a step down at the start of the year.

The upshot is that although some of the headline figures came in below expectations, on balance the data still show an improvement relative to the end of last year, the economist added.

The government has lowered its growth target for 2016 to a range of 6.5-7 percent and loosened its fiscal stance to lessen the reliance of the economy on exports.

Premier Li Keqiang cautioned that the country faces tougher problems and severe challenges and it should be fully prepared to fight a difficult battle.

The economy had expanded at the slowest pace in 25 years in 2015, when GDP climbed 6.9 percent compared to the government's full-year target of about 7 percent.

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