China’s weakest start to a year for investment growth since 2001 and unexpectedly slow industrial production add pressure for economic stimulus, just as Premier Li Keqiang signals he wants to avoid such a move.
Li indicated his confidence economic goals for 2014 are in reach, at his annual press briefing in Beijing yesterday. Two hours later, data showed factory output rose in January and February from a year earlier by the least since the global financial crisis, while retail sales grew at the slowest rate for the period since 2004.
The figures increase chances that China will take steps to boost growth including the first cut in almost two years to lenders’ reserve requirements, according to Societe Generale SA. Any threat to jobs, incomes and a 7.5 percent growth target could test the leadership’s resolve to curb pollution choking major cities, rein in shadow banking and control risks from a credit boom.
“They are serious about reforms and they are serious about protecting the growth target and particularly the employment part of that,” said Tim Condon, head of Asia research at ING Groep NV in Singapore, who previously worked for the World Bank. “We’re close to a decision point” on whether stimulus is needed, he said.
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