MORE EASING?

Despite rebounding factory activity data, economists said downward pressure on the world's second largest economy had not decreased and further policy easing measures would be still needed to support slowing economic growth.

China's manufacturing PMI usually retreats when a new year begins due to the Spring Festival holiday, but the latest figures showed an anti-seasonal rebound boosted by surging consumption. This reflects the same trend showed earlier by the HSBC flash PMI, which improved slightly to a four month high of 50.1.

Steven Zhang, vice president of Morgan Stanley Huaxin Securities, said he was far from optimistic about the economic situation despite the mild PMI improvement.

The holiday affected recovery was too slight to prove an overall economic pick up with more evidence from other indicators needed and the latest rate cut by the central bank also showed concerns from policy makers on the continued slowdown, Zhang said.

The People's Bank of China slashed benchmark deposit and loan interest rates by 25 basis points on Saturday, the second such cut in three months amid high market expectation.

HSBC chief China economist Qu Hongbin said the economy would likely remain sluggish confronted with external uncertainties even with the improvements in manufacturing, forecasting more easing measures to prevent further slowdown.

Sharing this view, both Zhang and Chu Jianfang, chief economist of CITIC Securities, said they expected to see more monetary easing measures to prop up the economy given the current economic climate.

China's economy grew 7.4 percent in 2014, the weakest annual expansion in 24 years, and a string of economic indicators for the new year, including manufacturing and trade data, all suggested continued weakness.