China’s factory output down in December amid negative cues

China's factory activity fell again in December as demand at home and abroad declined, a purchasing managers' survey showed and analysts were quick to point out that China needed to implement pro-growth policies to underpin the world's second-largest economy.

The People's Bank of China was expected to lower its requirement of the cash banks needed to hold in reserves to allow injection of additional credit by lenders into the economy to counter the impact of Europe's debt crisis as also sluggish US demand.

The HSBC Purchasing Manager's Index (PMI), designed to preview the state of Chinese industry before the publication of official output data crept up to 48.7 in December from a 32-month low of 47.7 in November, but failed to reach the flash reading of 49.

The HSBC PMI, which separates expansion from contraction, has been mostly under 50 since July.

Analysts said while the pace of slowdown was stabilising somewhat, weakening external demand was beginning to bite.

China's once booming economy is slowing down for a fourth successive quarter, easing further from the first quarter's 9.7 per cent annual growth rate with economists expecting the growth in the final three months of the year to have slipped below 9 per cent.