China manufacturing growth slows in February: HSBC

SHANGHAI (AFP) - China's manufacturing growth hit a four-month low in February but remained positive, British banking giant HSBC said on Monday, noting that the world's second-biggest economy was still recovering slowly.

The bank's preliminary purchasing managers' index (PMI) stood at 50.4 for the month, down from a final 52.3 in January, it said.

A reading above 50 indicates expansion and it was the fourth consecutive month of growth after 12 months of contraction.

"The Chinese economy is still on track for a gradual recovery," Mr Qu Hongbin, a Hong Kong-based economist with HSBC said in the statement, downplaying the fall in the PMI index.

"The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth," he added.

Chinese banks more than doubled their lending in January from December, granting 1.07 trillion yuan (S$210 billion) worth of new loans, official data showed earlier this month, as Beijing seeks to boost economic growth.

The domestic economy expanded by 7.8 per cent last year, its slowest pace in 13 years, in the face of weakness at home and in key overseas markets.

Policymakers cut interest rates twice in 2012 and have trimmed the amount of cash banks must place in reserve three times since December 2011 to encourage lending and pump up growth.

The PMI index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.

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