More needs to be done by PBoC

China industrial production (IP) growth decelerated further by another 1.1pp to 6.8% yoy in Jan-Feb (Con. 7.7%; SG 7.6%), the slowest pace since the outbreak of the Great Recession. 

Nominal retail sales growth also headed south to 10.7% yoy (Cons. 11.6%; SG 10%) from 11.9% yoy previously. Retail sales prices contracted by 0.3% yoy in the first two months after 0.4% yoy in December.

Societe Generale notes in a report on Wednesday:

• Chinese data from the first two months were vastly disappointing. The same pattern of weak Q1 growth (even in yoy terms) repeated for a third year. 
  
  
• Nonetheless, the puzzling seasonal pattern was not the only reason and we noticed various worrying signs of further deterioration in investment growth. Particularly, the funding conditions for both housing and infrastructure projects point to significant downside risk. 
  
  
• As for the policy, the easing measures from the central bank in February were probably early responses to this set of data. But more needs to be done, not least because the action so far has failed to meaningfully eased the liquidity tension.