-Donna Kwok, senior China economist at UBS
A slew of worse than expected data came out in China, adding to signs of weakness in the first two months of the year. Industrial production, retail sales and urban fixed asset investment in the world's second biggest economy came out below forecasts in February. China's retail sales rose 10.7% in February from the previous year, following the 12.0% gain a month earlier and against expectations for a 11.6% rise. Industrial output increased 6.8% in the first two months of the year compared with the same period last year, the National Bureau of Statistics reported. The figure fell from 5.7% in December and marked the weakest rate of expansion since late 2008. On a monthly basis, industrial production ticked up 0.45% in February from January. Additionally, fixed-asset investment, a key driver of the Chinese economy, advanced 13.9% in January and February from a year ago, also shy of estimates for a 15% gain.
The data came a day after a report showed deflationary pressures in the factory sector intensified in February, and is likely to reinforce expectations of more interest rate cuts and other policy stimulus to prevent a sharper slowdown in the world's second-biggest economy. China's GDP expanded 7.4% last year, the slowest pace since 1990, and last week leaders lowered the 2015 GDP growth target to "approximately seven per cent", from last year's objective of about 7.5%.
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