"The economy is not reacting to the policy easing. I expect to see the economy will continue to weaken over the next few quarters despite more easing measures."
- Kevin Lai, an economist at Daiwa Capital Markets
China's manufacturing and services sectors expanded modestly last month, yet the growth was not enough to erase fears about the downward trend of the world's second biggest economy. China's official manufacturing PMI came in at 50.1 for April, slightly above the 50.0 forecast by economists. The index has remained above the crucial 50-mark threshold, which separates contraction from expansion, for the past two months. Manufacturing accounts for a large proportion of economic output in China, therefore the gauge is a bellwether sign of the economy's health. Non-manufacturing PMI slid to 53.4 in April, down from 53.7 in the previous month. China's economy has been slowing for some time, with the nation's GDP growing an annualized 7.0% last quarter, the weakest rate in six years and compared with the 7.4% expansion in the fourth quarter of 2014. Analysts said that an array of stimulus measures by Beijing, including interest-rate cuts and stepped-up spending, were at best stabilizing the China's economy, which has been undermined by moribund domestic demand, an overbuilt property market and sluggish exports. More help for the economy is expected in the future but analysts expressed doubts about the effectiveness. Last week the government pledged to reduce import duties on a range of consumer goods and cut taxes on cosmetics and clothing to spur retail spending, while it also said it was lowering taxes on key resources, including rare earths. Also Politburo said it will step up targeted easing measures in an attempt to address the downward pressure on the economy.
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