How China manages its slowdown bears close watching

CHINA'S economy grew at its slowest pace in six years in the first quarter of this year as its real estate and manufacturing sectors slowed. At 7 per cent - still well above the growth rates of today's major global economies - China's Q1 GDP growth is its weakest pace of growth since Q1 2009, when the global financial crisis was in full swing.

But this surprised no one. The growth rate was in line with economists' consensus estimates and the 2015 growth target of "around 7 per cent" which Chinese Premier Li Keqiang announced last month. Just earlier this week, he acknowledged that the world's second largest economy continues to face increased "downward pressure". This week, too, the World Bank trimmed its 2015 growth forecast for China to 7.1 per cent, from 7.2 per cent, while the International Monetary Fund (IMF) expects a lower 6.8 per cent.

While no surprise, the latest growth figure remains an uncomfortable one. It is uncomfortable for the Chinese authorities as expectations now run high for further monetary policy easing and other targeted measures to boost growth to be rolled out in the coming weeks. These will have to be balanced against concerns about further growth in China's debt levels, and keeping the longer-term economic reforms on track. Mr Li said on Tuesday that China needs regulatory change to help new industries grow, raise efficiency and create jobs, but did not refer specifically to shorter-term stimulus measures.