China economy shows signs of steadying, more policy support needed

China's activity data was stronger than expected in November, with factory output growth picking up to a five-month high. Still, analysts believe more policy steps are needed to weather nagging headwinds from a cooling property market, risks from high domestic debt levels, and weak global demand as financial markets brace for interest rate rises by the U.S. Federal Reserve. "Real interest rates are still high due to falling producer prices," Wang Jun, senior economist at the China Centre for International Economic Exchanges (CCIEE), a Beijing-based think-tank. "It's still necessary to cut interest rates to support economic growth and combat deflation." Factory output grew an annual 6.2 percent in November, quickening from October's 5.6 percent and beating expectations of 5.6 percent.