China's Purchasing Managers Index, a gauge of the country's manufacturing activity, rose more than estimated to 50.3 percent in December from 49 in November, the China Federation of Logistics and Purchasing said late Saturday, alleviating fears of a slowdown in the world's second largest economy. A PMI reading above 50 indicates expansion of the sector.
The Conference Board earlier this month warned that the risk that the Chinese economy may be subjected to a marked slowdown in the coming months is rising amid deteriorating external conditions and domestic real estate tightening. It also said that the pass through from previous policy tightening measures will continue to act as a brake on the economy.
However, in his new year address on Saturday, Chinese President Hu Jintao said China would continue to maintain a balanced steady and fast economic growth, while adjusting its economic structures as well as managing inflation expectations.
Survey results from Markit Economics showed on Friday that the contraction in Chinese factory activity eased compared to the previous month, but new orders received by manufacturers continued to decline solidly. The seasonally adjusted purchasing managers' index rose to 48.7 in December from 47.7 in November. The score was below the flash estimate of 49, suggesting a decline in activity deeper than initially estimated.
The People's Bank of China hiked key policy rates five times since October last year and also expanded property curbs and tightened credit policies.
However, in view of the deteriorating global economic prospects and debt turmoil in Eurozone, the central bank reduced banks' reserve requirements for the first time in nearly three years this month.
In the third quarter, the Chinese economy expanded 9.1 percent year-on-year, the weakest pace in two years.
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