Monetary easing seen as Beijing's next move to spur slowing growth

The mainland will probably need to ease monetary policy for the first time in two years in coming months to prevent the economy from losing too much momentum, according to economists who doubt the "mini stimulus" announced last week can do the job.

Beijing has fast-tracked spending on railways and other projects in poorer regions and also cut taxes for small businesses, in what looks like a repeat of the fine-tuning that helped tide the economy over a soft patch last year. This time, though, Beijing will also need monetary easing - such as the first cut to bank reserve ratios since May 2012 - and other steps to bring the economy back to desired cruising speed, economists say.

"The measures will do some help but probably not enough. We think there may be monetary easing," said Kevin Lai, senior economist at Daiwa Capital Markets in Hong Kong.

Xinhua dismissed in an English language commentary speculation about any stimulus package in the offing. "A 'mini stimulus' theory has been widely circulated after the State Council announced a set of policies on Wednesday," it wrote. "However, any talk about an incoming stimulus package is misleading and those anticipating the kind of stimulus China unleashed following the 2008 global financial crisis are likely to be disappointed."

Such commentaries are not official policy statements, but can be read as a reflection of government thinking.

China acted for the first time this year to steady its stumbling economy by cutting taxes for small firms last Wednesday and announcing plans to speed up the construction of railway lines.

Xinhua said that the economy needed "a little stimulation but not a fully fledged stimulus".