-Hongbin Qu, economist at HSBC
Although activity in China's manufacturing sector picked up slightly in January, it still remains weak as growth in the world's second biggest economy continues to cool. According to the UK's banking giant HSBC, a preliminary reading of its manufacturing PMI showed it had climbed to 49.8 in January, up from the final 49.6 in the preceding month, which marked first contraction since May. A number above the 50-mark threshold indicates expansion in the sector, while below points to slowdown in activity. The output sub-index stood at 50.1 in January, up from 49.9 in December and representing a three-month high, the monthly report revelead. According to official data earlier in the week, the Chinese economy grew 7.4% in 2014, the slowest pace in almost 25 years, and shy of the government's 7.5% growth goal. The slowing economy has seen many policy actions over the last year, including measures to spur the weak property market, and ways to make business easier, particularly for smaller firms. Nevertheless, China's policy makers seem comfortable with slower pace of economic growth, stressing on numerous occasions that this is the "new normal" for China. Therefore, they have refrained from pursuing more aggressive stimulus measures such as significantly looser monetary or fiscal policies. The government attempts to shift the economy away from one driven by investment and exports towards greater consumption, ultimately resulting in a more sustainable growth.
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