China economic outlook: First quarter 2015

China’s growth achieved a soft-landing again last year, with the help of the authorities’ pro-growth measures. Nevertheless, the 2014 annual growth rate is only 7.4%, which missed the pre-set 7.5% target and registered the lowest level since 1991. Domestic demand remained subdued, mainly due to the persistently sluggish property market as well as its adverse spill-over effects to other related sectors. The anemic demand has prompted the authorities to beef up their efforts of monetary easing, including a November cut of benchmark interest rates and the more recent reduction of required reserve ratio (RRR). In the meantime, the PBoC continued to use a series of unconventional policy tools to inject liquidity to the banking sector.

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