HONG KONG—Police deployed pepper spray and used batons to push back thousands of protesters trying to block government offices, the latest escalation of the pro-democracy movement that entered its third month with no signs of resolution.

The Hong Kong Federation of Students and Scholarism, the two groups leading the demonstrations, called on crowds assembled at a protest site to surround the central government offices and the office of the chief executive, the city’s top official, aiming to block government workers from entering Monday morning. Early Monday, police beat back the crowds and cleared the road outside the chief executive’s office. At least 40 people were arrested, police said.

The HKFS stressed that protesters should stay peaceful and not use force. The student groups asked protesters to bring umbrellas, goggles, masks, food supplies and helmets to Sunday’s assembly, to protect themselves in case police responded with pepper spray or tear gas.

After the call to surround the government offices, protesters filled the roads around the complex where the buildings and Hong Kong legislature are located, skirmishing in some areas with police who used pepper spray and batons to stop their advance.

Local TV stations showed scenes of bleeding protesters and police handcuffing demonstrators. Some protesters erected barriers in the streets surrounding the government offices—the first new move to take territory by demonstrators in months—but the barriers came down after police cleared the area.

In a statement posted on the Hong Kong police website before the action started, police spokesman Kong Man-keung warned that “if anyone obstructs police duties, uses violence to attack police lines or tries to surround the government headquarters, police will certainly decisively enforce the law.”

Student leaders were defiant.

“We will continue our fight for democracy,” Oscar Lai, a spokesman for Scholarism, yelled to the crowd Sunday night, as they chanted along with him. “We will keep up the pressure on the government.”

The protesters are demanding free elections for Hong Kong’s top official in 2017, rather than a vote for prescreened candidates, which Hong Kong and Beijing are currently proposing.

Officials from both Hong Kong and Beijing have said those demands can’t be granted, and talks between student leaders and Hong Kong government representatives more than a month ago ended with little progress. “Definitely, the leaders should do something new because there is no progress,” said Kenneth Yung, a 31-year-old university lecturer who was at the main protest site Sunday night. “You have to use new tactics.”

Although public discontent with the Hong Kong government’s stance on the 2017 elections had been building for many months, the protests began in earnest two months ago Friday, when police used tear gas against demonstrators gathered in central Hong Kong. The police action roused further public support for the demonstrators, with tens of thousands of people at times occupying three sites.

Police cleared one of those sites, in the busy commercial district of Mong Kok, last week. The other two, in Causeway Bay and the main site in front of government buildings in Admiralty, remain occupied.

China’s hunger for minerals to build skyscrapers, cars and bridges produced a decade long surge in the price and production of key commodities.

Now, exporting nations are feeling the hit as the China-fueled boom slows.

Topping the list are big commodity players Australia and Brazil, but also resource-rich countries, such as Guinea, Indonesia and Mongolia, where minerals make up a disproportionate share of the economy and employment.

In countries specializing in crucial commodities, such as iron ore and coal, sluggish demand and falling commodity prices are reducing government tax revenue, increasing trade deficits and affecting currency values.

The Australian dollar reached a four-year low in November against the U.S. dollar due in part to sliding raw-material prices and slowing Chinese demand growth for those commodities.

J.P. Morgan recently cut its forecast for 2015 Australian economic growth to 2.8 per cent from 3.3 per cent, while Brazil halved its own growth forecast for 2014 to 0.9 per cent from 1.8 per cent. Mining profits as a share of the economy in both countries more than doubled during the past 15 years, according to the World Bank.

The longer-term impact of a collapse in commodity prices could be even more profound, hurting the economies of producing countries and boosting buying power in Western consumer economies.

“The impact of oversupply could be a mess,” says Lourenco Goncalves, CEO of Cliffs Natural Resources Inc., a midsize miner that laid off workers in Australia.

Meanwhile, the biggest mining companies say they are still committed to plans to keep topping production records. Rio Tinto PLC and BHP Billiton Ltd. have been shipping cargoes from Australia’s remote northwest at record rates.

For smaller countries, the growing dependence on mining is even more apparent. In Guinea, the share of mining profits as a percentage of GDP more than tripled to 18.3 per cent from 2000 to 2012, the latest data available, according to the World Bank. In Mongolia, it nearly doubled to 11.9 per cent.

At this point, no country can absorb China’s slack, although executives at mining companies, such as BHP Billiton, hope India may help absorb new production. Still, China is expected to set the tone for the next decade.

No commodity has been as China-dependent as iron ore, and for good reason: China makes half of the world’s steel, and 98 per cent of iron ore goes into steel production. China imports two-thirds of the 1.2 billion tons of iron ore traded annually on seaborne markets.

Far more countries have come to feed at the China trough: In 2003, eight nations exported more than 10 million tons of iron ore. Last year, nearly twice as many—15 countries—did so.

Australia, the world’s top iron-ore exporter, sends 80 per cent of its iron ore—worth US$67 billion last year—to China, and Brazil sends half its production of the mineral there.

In recent years, mining companies in those countries have ramped up production, employment and investment in railroads and ports anticipating that China’s steel industry would increase production and need more iron ore.

Instead, during the first eight months of the year, Chinese steel consumption fell 0.3 per cent to 500 million tons—the first such decline in 14 years.

“The country is settling into a slower steel consumption pattern, more typical of modern, developed Western economies,” says Daniel Rohr, an analyst at Morningstar Inc.

The upshot: a growing glut of iron ore. By 2018, the estimated iron-ore surplus will exceed 300 million tons, which could send prices next year into the US$50-a-ton range, according to Citigroup , after starting the year at US$135 a ton and slipping to US$69.80 on Friday.

The obvious response would be for the iron-ore industry to significantly scale back or eliminate output. But no one is budging.

Australia and Brazil are expected to squeeze out other players. Australia now accounts for about half of all iron ore traded by sea.

After investing billions to build railroads and ports, BHP and Rio say they will continue producing and squeeze costs out of production to make up for lower prices. That could mean renegotiated deals with suppliers of contract labourers, catering services and machines, and thousands of layoffs.

“Generally, when you have installed capacity, if you stop producing it, you end up with higher costs on a unit basis,” BHP CEO Andrew Mackenzie told reporters recently. “Our intention is always to maximize the production from existing capacity.”

Finally, another threat to iron ore awaits: scrap.

In a few years—a generation after it began mass-producing steel—China will start harvesting massive amounts of scrap steel from its first generation of mass-produced cars and washing machines. In large enough quantities, scrap steel can serve as an acceptable substitute for iron ore.

“The amount of recycling of material is going to increase, and that means you’ll make more and more steel from scrap, and not iron-ore and metallurgical coal,” Mr. Mackenzie said.

Adding scrap to the mix will worsen commodity oversupply—and the impact of lower prices on the global economy.

SHANGHAI—Wanda Cinema Line Co., China’s top cinema chain controlled by one of the country’s richest men, has received regulatory approval for an initial public offering of shares that seeks to raise 2 billion yuan (US$326 million).

The long-awaited approval arrived in the form of a brief notice published on the website of the China Securities Regulatory Commission on late Friday.

In April, Wanda Cinema, China’s biggest cinema operator in terms of box office takings, said it plans to sell up to 60 million yuan-denominated, domestically traded shares to fund the opening of new cinemas and to supplement working capital.

The company, controlled by Chinese property tycoon Wang Jianlin, chairman of Dalian Wanda Group, owned 142 cinemas in the nation’s 73 cities with 1,247 film screens as of the end of 2013, Wanda Cinema disclosed in the IPO’s preliminary prospectus at that time.

The cinema operator’s net profit in 2013 rose to 603 million yuan from 388 million yuan in 2012, while revenue rose to 4.02 billion yuan from 3.03 billion yuan, according to the filing.

Wanda Cinema’s stock listing approval came after its sister company Dalian Wanda Commercial Properties Co. disclosed its plan to list on the Hong Kong Stock Exchange with an IPO that could raise between US$5 billion and US$6 billion.

At that size, the IPO could be the biggest offering in Hong Kong since Swiss metals trader Glencore International PLC raised US$10 billion in a Hong Kong-London listing in May 2011, according to data provider Dealogic.

Wanda Commercial Properties is the real estate arm of Dalian Wanda Group, the Chinese company that bought U.S. movie chain AMC Entertainment Holdings in 2012.

Dalian Wanda is owned by Mr. Wang, a former military officer originally from southwest China’s Sichuan province. He set up the company’s operations in Dalian, a major city in Liaoning province in the northeast of the country.

Activity in China’s manufacturing sector has declined for the first time since May, flat lining at 50.0 in November, down from 50.4 in October, HSBC has confirmed.

British bank HSBC’s preliminary PMI for November came in at the break-even point dividing expansion and contraction. It was lower than October’s 50.4 and the weakest reading since May’s 49.4.

HSBC chief China economist Hongbin Qu said domestic demand had expanded at a sluggish pace while new export order growth eased to a five-month low.

Mr Qu said today's data suggests the manufacturing sector has lost momentum and points to weaker economic activity in November. Disinflationary pressures remain strong while the labour market weakened further.

"The PBoC's rate cuts, delivered on the 21st November, will help to stabilise property and manufacturing investment in the coming months” he said.

"We continue to expect further monetary and fiscal easing measures to offset downside risks to growth.”

An official survey showed China's manufacturing growth skidded to an eight-month low in November, signalling further downwards pressure on the world’s second-largest economy.

China’s official Purchasing Managers’ Index (PMI) released by the National Bureau of Statistics came in at 50.3 last month, lower than the 50.8 recorded in October and the weakest since a similar 50.3 reading in March.

The index, which tracks activity in factories and workshops, is considered a key indicator of the health of China’s economy, a major driver of global growth. A figure above 50 signals expansion, while anything below indicates contraction.

China’s central bank last month unexpectedly cut benchmark interest rates for the first time in more than two years, as authorities seek to prop up flagging growth.

The cut came after a string of disappointing data showed the Chinese economy is struggling with not just stalling factory growth, but other problems including soft exports and a weakening property market.

China’s economy expanded 7.3 per cent in the July-September quarter, down from 7.5 per cent in the previous three months and the slowest since 2009 at the height of the global financial crisis.

The People’s Bank of China on November 21 lowered its one-year rate for deposits by 25 basis points to 2.75 per cent and its one-year lending rate by 40 basis points to 5.6 per cent, a statement said.

China’s housing prices fell on a monthly basis for the seventh straight month in November, a survey showed Sunday, as the country’s property market weighs on growth.

The average price of a new home in China’s 100 major cities was 10,589 yuan ($US1720) per square metre in November, down 0.38 per cent from October, the independent China Index Academy said in a statement.

The fall was a slight improvement from the 0.40 per cent month-on-month drop in October, previous figures showed.

How does one come to understand China? Many wish to do so, especially in light of China’s growing global influence.

For some, language is the key that opens the door. With Chinese language, one is able to enter a people and their culture, opening up communication, literature, philosophy, belief and much more. Engaging and studying in translation always presents a barrier to understanding, but language is not enough.

For others, the Chinese classics provide the way to understand the place. You may focus on the traditional “four books and five classics” (四书五经), from before the unification under the Qin dynasty (221 BCE), or on the many texts gathered until the end of the last dynasty, the Qing, in 1912. Again, there is merit in this approach, especially in light of the way the classics are restudied and reinterpreted at every important turn in Chinese history – as is the case now.

For others, Confucius provides the way into China, if not each country deeply influenced by Confucianism. The “four books and five classics” are themselves from this tradition. Once again, such study is important, but does not provide the key to modern China.

Yet more possibilities are proposed, whether Daoism, or some mystical notion of the “East”, or kinship, or the metaphysics of yin-yang (阴-阳), which found its way into nearly every tradition or school of Chinese thought.

On a different note, some eschew language, culture, philosophy or belief and focus on economics. In this case, the “Asian Tigers”– Hong Kong, Singapore, Taiwan and South Korea – provide the template for China. Here, export-focused economies, industrialisation and state intervention led to rapid growth, high incomes and now economic specialisation.

Or perhaps Japan provides the model, with its rise to economic pre-eminence under American patronage. This is perhaps the least persuasive option.

Socialism still makes China tick

The missing element in all this is Marxism. China remains a socialist country, with the Communist Party effectively operating a one-party state with Marxist values.

Many continue to dismiss Marxism in China, whether in terms of a repressive and inadequate ideology or as empty words in which no one “believes” any longer. This is a great mistake and risks neglecting what is arguably one of the most important factors for understanding China.

Mao Zedong is the point at which one should begin, although it helps to understand Marx, Engels and Lenin, let alone the history of successful socialist revolutions from Russia onwards. Mao’s thought remains the focus of intense study and debate in China – so much so that President Xi Jinping frequently quotes Mao in national and international contexts.

Xi has a PhD in Marxism and has directed even more resources to the study and fostering of the Marxist tradition and the work of Mao Zedong. Marxism is now a distinct discipline in China.

Mao’s legacy is not dead and buried

More controversially, Mao’s acts as a leader are also vital for understanding China. Most debate turns around the role of the Cultural Revolution (1966-1976), which he fostered over the last decade of his life. Was it an aberration, an outburst of revolutionary enthusiasm, or perhaps an effort to restore his sliding power?

The semi-official narrative is that the Cultural Revolution set China back in terms of economics, politics and society. The aberration was thus corrected after Mao’s death, when the path of reform was undertaken.

However, another and persuasive argument, made by Mobo Gao, is that it was precisely the Cultural Revolution that set China on its current path. Thoroughly shaking up vested interests in society, from top to bottom, it cleared the ground for China’s rapid rise to becoming the leading global power. This was the shake-up needed to unsettle centuries, if not millennia, of social assumptions and cultural norms.

Against the orthodoxy that the economy came to a standstill during the Cultural Revolution, it has become clear that the economy actually forged ahead as though released from its shackles.

Unfortunately, I have yet to find a “mainstream” foreign commentator who is even partly aware of the nature of Chinese Marxism. Obviously it entails careful study and a feel for the subject matter. It requires some sense of the meaning of “socialism with Chinese characteristics” in all its complexity and apparent paradoxes. And it needs to be understood that in China a “Marxist entrepreneur” is not a contradiction in terms.

Languages, the classics, Confucius: these and more are obviously important for understanding China. But to rely on these is to neglect the crucial factor of Marxism. Many may aspire to becoming a Zhongguotong (中国通) – one who understands and senses at a much deeper level how China ticks.

Without Marxism, such an aspiration is mere pretence.

Roland Boer does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

The Chinese conglomerate Fosun has reportedly sweetened its bid to win control of French holiday group Club Med, coming in higher than a rival offer from an Italian businessmen.

Fosun, which has brought Brazilian investor Nelson Tanure on board as a minority partner, is upping its bid 50 cents a share to 23.50 euros - modest, but above the latest 23.00-euro-per-share offer made by Italian businessman Andrea Bonomi.

Fosun and Bonomi are locked in a long bidding war for Club Med, whose board in early October approved the earlier Fosun offer as "more with the interests of the company".

The improved Fosun offer valued Club Med at 890 million euros ($A1.2 billion).

It was lodged on Monday with French stock market regulators, who gave Bonomi a deadline of December 17 to counter it with an elevated bid.

Speculation that the offer could yet go higher drove Club Med's share price close to 24 euros in late trading on Monday in Paris.

Club Med first became a high-profile name in the European tourism industry for its all-inclusive budget family villages.

It has since moved up-market, weathering financial storms in the process, and is now looking for further expansion, including in China where it has been a partner with Fosun.

According to company figures released Friday, of the 25,000 new clients Club Med attracted in 2013, 80 per cent were Chinese - and the rest were Brazilians.

The US has issued a fresh appeal to Beijing to exercise restraint in Hong Kong, adding it was concerned that British MPs had been barred from visiting the territory.

"We encourage differences between Hong Kong authorities and protesters to be addressed peacefully through dialogue," State Department spokeswoman Jen Psaki told reporters.

Washington had conveyed its concerns to both Beijing and the authorities in Hong Kong, she added.

"We continue to call for protesters to express their views peacefully and for Hong Kong authorities to exercise restraint," Psaki said.

Hundreds clashed with police as they tried to storm Hong Kong government headquarters late on Sunday. Dozens were left injured.

Protesters want fully free leadership elections in 2017, but Beijing has said all candidates must be vetted by a loyalist committee.

China has meanwhile refused to grant visas to a delegation of eight British MPs who want to visit Hong Kong.

Under the terms of the handover by London to China in 1997, Hong Kong was to enjoy a string of freedoms not granted to the Chinese mainland.

"We are concerned by reports that Beijing intends to deny entry to a group of British members of parliament to Hong Kong," Psaki said.

China has issued draft rules that would regulate the establishment of a nationwide property-registration system in August this year.

According to news website The Paper, the draft rules have been approved by the State Council -- the equivalent of China's cabinet -- and will come into effect on March 1, 2015.

The property-registration system is hoped to help the government track homeownership, fight corruption and eventually make it easier to rollout a property tax nationwide.

The establishment of some kind of property registry has long been a stated goal of the central government but the plan has been delayed many times in the face of obstruction from local governments and other vested interests.

It appears that some changes have been made to the original draft guidelines, with the addition of 5 clauses, including more detailed provisions for different types of assets and other clarifications.

However, the information contained in the registry still won't be available to the general public, according to the final draft of the rules.

Hong Kong and Shanghai shares have rallied on hopes the Chinese government will unveil fresh easing measures to boost the economy following another batch of weak manufacturing data.

The Hang Seng Index in Hong Kong on Tuesday rose 1.23 per cent, or 286.85 points, to 23,654.30 on turnover of $HK104.41 billion ($A14.57 billion).

Traders moved back into the Hong Kong market after sending it tumbling 2.6 per cent on Monday in response to China's official index of manufacturing, which showed a further slowdown in activity. Tumbling oil prices also weighed on energy firms.

Adding to buying sentiment on Tuesday was a surge of more than three per cent in Shanghai, where investors were betting that leaders will unveil more measures to kick-start the world's No.2 economy.

The central People's Bank of China last month announced a surprise cut in interest rates, which sent regional stocks surging.

Investment firm Reorient Group said: "These fundamental factors, besides cheaper crude oil, are putting legs under the rally in China stocks, which are also clearly benefiting from technical drivers including rising trading turnover and investors chasing the current upward momentum."

Wall Street offered a soft lead, with retailers hurt by disappointing sales over the Thanksgiving/Black Friday weekend, which kicks off the festive shipping season.

The Dow eased 0.27 per cent, the S&P 500 fell 0.68 per cent and the Nasdaq sank 1.34 per cent Monday.

A slight recovery in oil prices after a two-day plunge to five-year lows helped energy companies, which had been punished on Friday and Monday.

PetroChina rose 1.87 per cent to $HK8.19 and CNOOC added 1.12 per cent to $HK10.84. However, airlines, whose biggest outlay is fuel, eased after a healthy run-up - Cathay Pacific slipped 1.47 per cent to $HK17.4 and Air China was 0.84 per cent lower at $HK5.93.

Among other firms, Henderson Land Development added 1.87 per cent to $HK51.65, HSBC gained 0.39 per cent to $HK76.40 and China Mobile edged up 0.65 per cent to $HK93.40.

In mainland China, the benchmark Shanghai Composite Index shot up 3.11 per cent, or 83.39 points, to 2,763.55 - its highest since July 2011 - on turnover of 397.2 billion yuan ($A70.11 billion).

The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.48 per cent, or 20.94 points, to 1,433.50 on turnover of 265.8 billion yuan.

"Investors poured funds into high-quality, blue-chip financial firms on hopes of a strong stock market performance," Zhang Qi, an analyst for Haitong Securities, said.

And Tang Yonggang, chief investment adviser at Hong Yuan Securities, told Dow Jones Newswires: "The liquidity-driven strength in the stock market will extend."

Banks rebounded, recovering from falls on Monday after the central bank announced plans for deposit insurance.

Minsheng Banking Corp surged by its 10 per cent daily limit to 7.91 yuan in Shanghai while Ping An Bank soared 7.63 per cent to 13.12 yuan in Shenzhen.

Securities firms also rose on expectations of good earnings growth. In Shanghai, Everbright Securities rose by its 10 per cent daily limit to 21.41 yuan and Industrial Securities jumped 8.22 per cent to 12.24 yuan.

China will send artists, film-makers, and TV personnel to live among the masses in rural areas in order to "form a correct view of art".

The move is the latest by the ruling Communist Party to echo the Mao Zedong era, during which intellectuals and others were "sent down" to labour among peasants in the countryside.

It comes weeks after President Xi Jinping told a group of artists not to chase popularity with "vulgar" works but promote socialism instead, with state media comparing his remarks to a speech by Mao.

China's media watchdog "will organise film and TV series production staff on a quarterly basis to go to grassroots communities, villages and mining sites to do field study and experience life", the official Xinhua news agency reported, citing a statement by the State General Administration of Press, Publication, Radio, Film and Television.

Scriptwriters, directors, broadcasters and anchors will also be sent to work and live for at least 30 days "in ethnic minority and border areas, and areas that made major contributions to the country's victory in the revolutionary war", Xinhua added.

The move "will be a boost in helping artists form a correct view of art and create more masterpieces," Xinhua said, citing the media administration.

Beijing imposes tight controls over art and culture, and ideological restrictions have tightened under Xi, with authorities censoring Ai Weiwei and other artists it perceives as challenging its right to rule.

Joseph Cheng, professor of political science at the City University of Hong Kong, described the move as a Mao-style "rectification campaign" aimed at silencing potential critics as Xi leads a far-reaching anti-graft sweep.

"Xi Jinping is under considerable pressure, because his anti-corruption campaign certainly has hurt a lot of vested interests," Cheng said.

"This is again a time of pressure tactics on the intelligentsia and on the critics."

The new edict harkens back to the era of Communist China's founder, when popular art was little more than propaganda, but Cheng said that whereas Mao's Cultural Revolution was aimed at the entire intelligentsia, the current move was more targeted.

"This campaign is a bit different in the sense that as long as you don't challenge the authorities - as long as you keep quiet - you are safe to keep making money," he said.

In October, Xi told a group of artists that they should not become "slaves to the market". The state-run China Daily likened his remarks to a well-known speech by Mao in the 1940s which outlined his view that the arts should serve politics.

Deputy Prime Minister Warren Truss doesn't believe US President Barack Obama will ever be able to secure a free trade deal with China.

Mr Truss told coalition MPs at a party room meeting in Canberra there had never been a time where Australia had been so "dominant" on the international stage.

Proof of this was the securing of free trade deals with China, Korea and Japan, he said on Tuesday.

Mr Truss said Mr Obama, who recently visited Brisbane for the G20 summit, had been "peeved" that Australia secured an FTA with China.

It was something the US president "would never be able to get", he said.

Treasurer Joe Hockey told the same meeting the FTAs would not have been secured without the coalition government withdrawing assistance to industries such as car manufacturing.

Woolworths will tap into the fastest growing wine market in the world, with its liquor business acquiring a large drinks distributor in China. 

Woolworths Liquor Group -- which includes Dan Murphy’s, BWS, and Cellarmasters -- will acquire Summergate Fine Wines & Spirits for an undisclosed price, the takeover target said in a statement. 

The founders of Summergate, Ian Ford and Brendan O’Toole, will both stay on as directors on the board. Mr Ford will remain Summergate chief executive officer.

Summergate is a leading distributor of alcoholic drinks in the Chinese market and also operates a subsidiary, Pudao Wines. 

"This acquisition comes at a time when the market is emerging into a new era of consumer-driven demand across the region," Summergate said in the statement.

"The combination of Summergate’s insight, distribution platforms, world-class portfolio, and people, coupled with WLG’s powerful consumer facing expertise, scale and experience, positions Summergate for sustained, rapid growth in the years to come."

Mr Ford said of all the companies Summergate spoke to during the process of seeking capital for growth, WLG was seen "by far" as the best fit for the business.

"We share a long-term view on future opportunities and have the resources, expertise and systems to support accelerated growth," he said. 

WLG managing director, Brad Banducci, said the group was looking to tap into China, which is the "the fastest growing wine market in the world". 

"They [Summergate] have extensive knowledge and experience in the region’s drinks market and we are thrilled to make this investment to help support and grow Summergate even further," he said. 

Woolworths' liquor division has been one of the retailer's best performing businesses in recent years amid tough competition in its core supermarkets business from Coles and Aldi, and the money-losing roll-out of its Masters home improvement brand.

Woolworths shares dropped as low as $29.96 on Tuesday, their lowest level in nearly two years, before recovering slightly to finish the day at $30.24. The moves came amid growing concerns about the company's ability to fend off supermarket competition and disappointment with the Masters business.

The Conversation

China’s central bank surprised most observers last month when it announced its first interest rate cut in more than two years. The move is intended to bolster growth in the world’s second-largest economy, following stimulus measures by central banks in Europe and Japan.

The People’s Bank of China cut its one-year lending rate by 0.4 percentage point to 5.6 per cent, reducing the cost for businesses to hire and invest. It also lowered its deposit rate by a quarter point to 2.75 per cent, while giving banks a more liberal hand in how to pass that on to consumers.

But the PBOC emphasized that the cut was neither a change in China’s monetary policy nor a move geared towards boosting the economy – which is growing at the slowest pace in more than five years. Most China watchers, however, interpreted this to mean exactly the opposite. They saw it as a moment of awakening for China’s leaders to the need to show their commitment to preventing the economy from slowing any further.

The economy was in desperate need for more liquidity to avoid slipping into deflation. Growth in both consumer and producer prices has been slowing for much of the year. And the leadership felt it had to do this even if it meant offsetting efforts to fight spiraling debt loads among local governments and the growth of a shadow banking industry that operates beyond the reach of regulators. Both groups will get a boost from a lower interest rate.

Investment and consumption: a balancing act

But will the stimulus work or is it the wrong medicine for what ails the Chinese economy? And does it signal any change in how China’s leaders oversee monetary policy? To answer these questions, we have to go back to a fundamental issue of how China manages demand for its goods and services.

First, China’s growth has long been driven by investment rather than consumption, in contrast to most Western economies. Since 2010, private domestic consumption has accounted for only about 35 per cent of China’s GDP, significantly lower than 60 per cent in Japan and 70 per cent in the US. In other words, China produces a lot more than what its own market can consume, which is why it has been so dependent on exports and foreign demand to absorb this surplus.

Second, when the world economy falters, this imbalance between investment and consumption gives rise to a serious problem of excess capacity. In other words, China may have produced more computers, jeans and other goods than consumers at home and abroad are willing to buy. This was exactly what happened during the financial crisis five years ago when global demand dried up, prompting China to shore up domestic consumption by implementing a 4-trillion-yuan stimulus program – about US$650 billion in today’s dollars.

Too much stimulation

But it didn’t really work. While it might have added a few percentage points to GDP growth, it actually worsened the overcapacity issue it was trying to remedy by overstimulating the manufacturing sector. Much of the liquidity injected into the market was disproportionately distributed to state-owned enterprises and investment companies created and endorsed by local governments.

This newly injected credit allowed the state sector to maintain or even expand its capacity, even as market demand remained subdued. Since the state sector is concentrated predominantly in capital-intensive industries, this has led to excess capacity accumulating mainly in industries such as cement, coal, petrochemicals and steel.

In light of what happened during the crisis, is the recent rate cut going to do much good? This mostly depends on whether local politicians are allowed to distort how the additional bank credit gets allocated, as was the case in 2008 and 2009. From this perspective, China’s banking system remains pretty much the same as it was then. The cut will not only give the deeply indebted state-owned enterprises and investment companies a new lease on life, but it will also leave the overcapacity issue unresolved, or even worse than before.

China’s Marshall plan

Global investors reacted to the rate cut with great enthusiasm, especially in commodity markets. But it’s a different plan that they should be paying more attention to, one that could actually solve China’s overcapacity problem and have a more measurable impact on the world economy, if not an entirely favorable one.

Two weeks before the cut was announced, Chinese President Xi Jinping proposed a new initiative for regional economic integration labeled “One Belt, One Road.” Dubbed China’s Marshall plan, this grand project would establish a so-called Silk Road Fund with US$40 billion to invest in infrastructure within certain countries in Central and Southeast Asia. This plan offers a better solution to the overcapacity problem than cutting interest rates as it promises to develop a large external market for Chinese products.

Piecing together these two policies gives us a clear picture of how China’s economic governance might affect the global economy. Given the absence of more fundamental reforms in China’s political economy, the issue of misallocation of resources and overcapacity in China will still linger. But, at the same time, the country is about to take advantage of its growing influence in the region to solve its domestic economic issues.

The stimulus should help some parts of the world that will benefit from any increase in Chinese growth, but it will also mean more competition for others as the country throws more of its increasing economic weight around. Especially within the neighboring regions where China holds more sway, countries competing with China in the sectors plagued by overcapacity such as petrochemicals and steel will face strong pressure to restructure.

In regions where China enjoys less of a presence, by contrast, more trade conflicts between China and her partners in these markets will loom large.

Hans H. Tung does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

Taiwanese voters over the weekend delivered a thumping defeat to the ruling Nationalist Party, or Kuomintang (KMT), with sweeping victories for candidates from the pro-independence Democratic Progressive Party (DPP) and independent candidates in municipal elections across the island, including in the key cities of Taipei and Taichung, traditionally KMT strongholds.

Seen from Hong Kong, the narrative of the Taiwan elections is clear: Taiwanese voters, spooked by the bleak prospects for democracy in Hong Kong and the violence employed against Hong Kong's pro-democracy protesters, punished President Ma Ying-jeou and his Nationalist Party for their China-friendly policies. It is a narrative that has been widely reported in the international media, and has been reported alongside quotes from Chinese state-controlled media to support the conclusion that Beijing is concerned at the outcome.

However to view the Taiwanese election as primarily a result of the "China factor" would be a mistake. While Taiwanese voters were keenly aware of Hong Kong protests, and certainly see the fate of Hong Kong as an indication of what Taiwan would face if they signed up to unification with China under the "One Country, Two Systems" model, these issues did not have much direct bearing on how they actually cast their votes.

Speaking to Taiwanese voters in the days since the elections, it is clear that the Taiwan elections were decided by the same factors that decide elections in democracies the world over: local issues and personality. Taiwanese voters were primarily concerned with local issues such as the economy, unemployment, inflation, stagnant wages and property prices, and they dislike President Ma, whose approval ratings are around 20 per cent.

The other factor at, play, however, is one that should be more discomfiting for Beijing.

Put simply, the KMT was voted out because Taiwanese voters felt it was time for a change.

The KMT had been in power for many years, and voters decided to vote them out and give the other party a go. It's the same thing that happens in elections across the world, from Australia, to the US, to the UK and elsewhere. Parties in power over time become complacent, lose the goodwill of voters, and get voted out. For good reason, "change" is a theme that has been adopted by many election hopefuls, from Gough Whitlam to Barack Obama.

In this unremarkable way, Taiwan has quite remarkably demonstrated that it is a mature, pluralist democracy just like others the world over.

It must be an uncomfortable prospect for Beijing. The Chinese Communist Party, as rulers of a single-party state, have long regarded and been comfortable dealing with Taiwan as another single-party state, ruled by the KMT. The CCP is not comfortable with pluralism.

Hong Kong and Macau, prior to their respective handovers, were also effectively "single-party states", with the British and Portuguese colonial masters functioning as the single ruling party in each case. A transition to a "One country, two systems" model can only fit comfortably within a context of single-party rule, with the justification to the ruled people being that one unitary ruler is simply being switched for another.

This past weekend the Taiwanese people showed, once again, that it is a model they cannot fit.

Antony Dapiran is a Hong Kong-based international lawyer and writer. Twitter @antd

TAIPEI—President Ma Ying-jeou said Tuesday he will resign as chairman of Taiwan’s ruling Nationalist Party after voters rebuked his accommodative China policy in local elections, making any new cross-strait agreements next year less likely.

The resounding defeat for Nationalist candidates over the weekend was widely interpreted as a vote of no-confidence in Mr. Ma’s policies, including his aggressive push to bring Taiwan’s economy closer to China, which still claims the island as its own.

It means that the chances of a historic meeting with Chinese President Xi Jinping are rapidly fading as Mr. Ma, who has sought to make improved cross-strait ties his signature achievement, increasingly is viewed as a lame duck with just over a year remaining in his term.

The elections on Saturday were seen as a barometer of the presidential election in early 2016, with the opposition Democratic Progressive Party (DPP) now seen in a better position as the Nationalists plunge into an internal power struggle.

The DPP won 13 out of 22 races for city and county heads, while the Nationalists, also known as the Kuomintang or KMT, won just six—down from 15 in the last election. Three seats were won by independent candidates.

The developments leave China weighing its options on how to push forward its goal of eventual reunification with the island—something the DPP has rejected.

“In the face of this unprecedented defeat, as the party chairman I am willing to shoulder most of the responsibility,” Mr. Ma said. “If the party can self-review and implement reform measures, then we can never be defeated.”

He was expected to make a formal announcement at a weekly party committee meeting Wednesday.

Several KMT heavyweights have also resigned since the election drubbing, including Premier Jiang Yi-huah and party secretary-general Tseng Yung-chuan. The 81-member cabinet also resigned en masse Monday, a standard procedure in Taiwan after a president or premier steps down.

Mr. Ma had pushed in vain for a meeting with Mr. Xi at the Asia-Pacific Economic Cooperation leadership summit, which held in Beijing in October. Although Beijing rejected a meeting then, it hasn’t closed the door to a possible meeting at a different time and location.

For Mr. Ma, a meeting with the Chinese leader would cement his legacy as the first Taiwanese leader to break that barrier and pave the way for more economic integration and possibly more political exchanges between the historic foes.

But cross-strait watchers say without his party-chief title, Beijing’s interest level in Mr. Ma is significantly reduced. With his low approval ratings, some analysts say Mr. Ma lacks the mandate to push through any breakthroughs with China, such as starting a political dialogue that Beijing eagerly wants.

“For such a meeting to happen, Mr. Ma will have to bring something to the table, such as some sort of progressive agenda. But now, there is no more incentive for Mr. Xi to meet with Mr. Ma,” said Liu Shih-Chung, the head of Taiwan Brain Trust, a think tank close to the DPP.

Wu Yongping, a professor and expert on cross-strait relations at Tsinghua University’s School of Public Policy and Management in Beijing, said a meeting was now less likely unless Mr. Ma took on the high-stake gamble of continuing to push an unpopular pact to liberalize trade in services.

“But given Ma’s character and style, the possibility of this is minuscule,” he said.

Six decades after China and Taiwan split in a civil war, Mr. Ma was the most willing partner Beijing had found, interested in economic integration while putting off—but not ruling out—talks on China’s objective of reunification.

Since Mr. Ma took office in 2008, Taiwan and China have signed 21 trade agreements and more deals are being negotiated.

Beijing-based policy analysts played down the impact of the election, saying that Taiwan’s two main parties were unlikely to put economic integration in reverse, and that the DPP would have to moderate its positions for the presidential elections.

“Regardless who emerges as Ma’s successor [as party chairman], the KMT would likely maintain its policy principles on cross-strait relations,” said Yin Cunyi, an economics professor and expert on cross-Strait relations at Tsinghua University’s School of Public Policy and Management in Beijing. “As long as these principles don’t change, the mainland shouldn’t have to be too concerned with who’s in charge.”

KMT lawmaker Wu Yu-sheng also expressed the same optimism.

“There is no need to push for a Ma-Xi meeting now. No matter who will become the next KMT chairman, the ongoing communication between KMT and Chinese communist party will not stop.”

HONG KONG—Three founders of the pro-democracy protest group Occupy Central with Love and Peace called on Tuesday for students to end their occupation of city streets, but student leaders vowed to press on.

The middle-aged leaders of the Occupy movement raised the idea of using civil disobedience in the former British colony to push for greater democracy last year, but student protest groups have been at the forefront of the two-month-long street demonstrations—and student leaders on Tuesday quickly rejected the idea of abandoning their encampments.

In an emotional plea on Tuesday, the Occupy leaders said they feared the clashes between protesters and police were escalating at a dangerous pace and urged the students to stand down. The Occupy leaders also said they planned to surrender to police on Wednesday over their role in the mass demonstrations.

“In past few days, we can see the police are increasingly out of control. We don’t know how much more violence they would impose on occupiers. We hope occupiers retreat from the protest sites,” Occupy leader and law professor Benny Tai told a press briefing, jointly attended by the other co-founders of the Occupy group, Chan Kin-man, a sociology professor, and the Rev. Chu Yiu-Ming.

By surrendering to the police, “we will bear the legal consequences and hope the students will retreat,” Mr. Tai said in a prepared statement. Cardinal Joseph Zen, the former head of Hong Kong’s Catholic Church and a core supporter of the Occupy group, said he would surrender to the police together with the trio Wednesday. No pro-democracy lawmakers announced plans to turn themselves in.

Mr. Chu, 70, the eldest of the Occupy leadership trio, tearfully recounted the sorrow he felt over seeing images of police beating young protesters with batons and forcibly dragging away the demonstrators to stop their actions.

“This all made me, this old man, deeply sad. Many times, I knelt down on my knees to pray for God to protect us. And I hope all participants of this movement could safely go home,” he said.

Hong Kong’s Secretary for Security Lai Tung-Kwok said police would handle the Occupy leaders’ surrender according to established police protocol.

“Any persons who intend to turn themselves in because they believed that they had breached the laws, of course, it is welcome,” Mr. Lai said.

Hong Kong authorities have long maintained that the street protests are illegal activities and have sought court injunctions to remove demonstrators from the encampments. Violence has flared in recent days as police have become more assertive in their attempt to clear protesters off the streets.

Earlier this week, police used batons and pepper spray to push back students who had seized control of a street by the Hong Kong government headquarters. More than 200 people have been arrested in the past week. Authorities said dozens of people have been injured in the clashes, including several police officers.

Police cleared one of the three protest sites in the city last week, and were expected to move against the other two sites in the coming days, but student protesters insisted that they would continue their occupation.

Tommy Cheung, a leader of student protest group the Hong Kong Federation of Students, told reporters on Tuesday evening that the students respected the Occupy group’s advice, but he said students wouldn’t surrender their encampments. “We will ultimately bear the legal responsibilities,” he said.

Joshua Wong, the leader of another student protest group, Scholarism, who was arrested during protests last week, lauded the Occupy leaders for spreading the idea of civil disobedience to the broader public. But Mr. Wong also said students wouldn’t end protests now. Mr. Wong joined with two fellow students to start a hunger strike late Monday night in a bid to restart talks with the government.

Students and other protesters have been demanding the right to publicly nominate and vote for candidates for the city’s top leadership post, the chief executive. Beijing has said that China’s central government has the right to vet candidates before they can run for the top office. On Monday, current Chief Executive Leung Chun-ying repeated his stance that Beijing’s decision was nonnegotiable.

The Occupy group first raised the idea of street occupations in early 2013 to paralyze Hong Kong’s central business district to push for changes to the city’s election process. The group held multiple forums and an unofficial referendum over a year and a half to build support. The group initially planned to have a sit-in starting on Oct. 1 that will last for a couple of days.

But a week-long class boycott initiated by students at the end of September ultimately evolved into a widespread occupation overtaking the Occupy group’s momentum and sidelining the group’s leaders from the street protests.

BEIJING—Chinese tax authorities are vowing to step up supervision of multinational companies as part of a crackdown on tax avoidance in the latest challenge for foreign firms operating in the highly regulated China market.

Zhang Zhiyong, deputy director of the State Administration of Taxation, said the agency will conduct comprehensive audits of the profits of foreign companies. In a notice in a question-and-answer format posted on the agency’s website Monday, Mr. Zhang singled out for scrutiny “base erosion and profit shifting” tactics, which are among a number of methods used to shift profits across borders to countries with lower tax rates.

The notice is the latest sign of heightened official attention to foreign companies, following a spate of antitrust investigations involving multinationals. It comes as China’s economy is slowing for the first time in nearly a generation, putting pressure on tax revenue at a time when the Chinese public is demanding better education, health care and other social services.

Tax revenue in the first 10 months of the year rose 7.6 per cent, down from a 9.8 per cent growth rate same period last year and falling from double-digit growth in previous years. Economic growth, meanwhile, eased to 7.3 per cent in the third quarter, and many economists and analysts expect the government will miss the official 7.5 per cent target this year for the first time in more than a decade.

China signalled a tougher line on taxes last month when the government’s news agency, Xinhua, reported that a U.S. multinational will pay the Chinese government 840 million yuan (US$135.5 million) in back taxes and interest after authorities found the firm had avoided taxes. The U.S. firm also agreed to pay more than 100 million yuan in additional taxes every year, Xinhua said.

Xinhua didn’t identify the company by name but referred to it as “Company M” and described it as being globally well known, among the world’s top 500 companies and having set up a wholly foreign-owned enterprise in Beijing in 1995.

The description matches, at least in part, the U.S. software giant Microsoft Corp. Microsoft, in response to a request for comment, said it would neither confirm nor deny that it was the company referred to in the Xinhua report. The company said in a statement Tuesday that “Microsoft’s profits are subject to the appropriate tax in China.”

Multinational companies’ tax practices are coming under scrutiny around the world by governments eager to shore up their tax revenue. At a meeting last month in Australia, leaders of the Group of 20 major economies, including Chinese President Xi Jinping , endorsed a platform for cracking down on corruption and tax avoidance.

In the notice this week, Mr. Zhang, the Chinese tax official, said President Xi at the summit cited the need to “strike at international tax evasion.”

Regulators world-wide have targeted common practices like charging local subsidiaries fees for the use of a company’s brand, intended to shift profits to jurisdictions with a lighter tax burden.

The U.K. and EU have examined companies like Apple Inc., Starbucks Corp. , Amazon.com Inc. and Google Inc. for shifting profits to low-tax areas. Starbucks agreed last year to pay U.K. corporation tax for the first time since 2008.

While these tactics are legal, they generate bad publicity for companies and contribute to the political fallout.

China’s tax crackdown, if it gains steam, could add to the complaints of foreign companies, which have criticized regulators in the country for a lack of transparency. Earlier this year, auto makers Audi AG ,BMW AG and Daimler AG , along with Microsoft and U.S. chip maker Qualcomm , were all investigated for suspected violations of the country’s antimonopoly law.

Audi, which was fined, said it would improve its management processes to prevent a repeat of the episode. BMW also was fined and said it was committed to “responsible and lawful conduct.” Daimler, owner of the Mercedes marque, has said it is cooperating with the continuing investigation. Microsoft said it was compliant with Chinese law. Qualcomm said it wasn’t aware of any activity that violated the antimonopoly law.

The U.S. Chamber of Commerce in China said enforcement of the rules “arguably violates commitments that China undertook when it acceded to the World Trade Organization.”

China says the investigations aren’t aimed at foreign companies and are being carried out fairly and according to law.

Activity in China's non-manufacturing sector increased in November at a slightly faster rate than in the previous month, according to official data.

A statement from the China Federation of Logistics and Purchasing said China's non-manufacturing purchasing managers' index (PMI) printed at 53.9 in November, after a read of 53.8 in October.

Analysts had expected a reading of 53.8.

A reading above 50 indicates expansion, while a reading below signals contraction.

The non-manufacturing PMI covers services including retail, aviation and software as well as the real estate and construction sectors.

The data are based on replies to monthly questionnaires sent to purchasing executives in 1,200 companies in 27 non-manufacturing sectors.

The federation issues the data along with the National Bureau of Statistics. 

Trade Minister Andrew Robb arrived in Beijing last night ahead of two days of high-level talks with senior business people, academics and bureaucrats from China and Australia.

While he’s in town, Mr Robb will also be spruiking the benefits of the recently inked ‘free-trade agreement’ between the two countries.

In an address to the Australia-China Chamber of Commerce on Friday morning, the Minister is expected to do his best to encourage Australian businesses already operating in the mainland to take full advantage of the trade agreement.

The only problem is the agreement isn’t really an agreement and it’s not even about free-trade.

The much heralded deal that was signed when Chinese President Xi Jinping was in Canberra a couple of weeks ago was technically a ‘a statement of intent to conclude an FTA’.

An actual agreement won’t come into existence until after the text is ‘legally scrubbed’ and painstakingly translated into Chinese -- a process that could take from three to six months.

Once that process is over, the deal will be made public and available for signing. In Australia, it will be tabled in parliament for 20 joint sitting days and be examined by the joint standing committee on treaties, which will conduct an enquiry into the agreement and report back to parliament.

China will need to have it ratified by the National People’s Congress standing committee on treaties. 

Once that’s done the two sides can exchange diplomatic notes to put the agreement into effect, they will then either specify a particular date or thirty days from the exchange of letters and then it will enter into force. 

That means it’s likely the whole thing will only come into effect towards end of next year or early 2016.

But when it does come into effect, it still won’t be a free-trade deal. The agreement is probably best described as a ‘preferential-trade deal’.

After all, if it really was a free-trade deal, there would have been nothing to negotiate and the last decade of diplomatic back and forth would have been for naught.

In the end, Australia wanted a package of outcomes on agricultural market access which was roughly consistent with the New Zealand’s 2008 FTA and also a decent market access package covering services and investment.

For its part, China was interested in investment, movement of natural persons and a reduction in Australia’s tariffs on manufactured goods.

But ideally, Australia would have liked to have gained access for agricultural products such as cotton, sugar, wheat and rice and China was pushing for a relaxation of regulatory arrangements on state-owned enterprises.

In the lead-up to the announcement of the deal, the opposition accused the government of selectively leaking good news.

In fact, some of the good news leaked prior to the deal being signed, didn’t even end up as being part of the deal.

The widely touted the $1 billion-a-year Australian beef cattle live export deal was actually separate to the agreement.

And as Mexico’s former ambassador to China quipped, Australia’s upgrade to a ‘comprehensive strategic partnership’ in China’s eyes was "like getting 'employee of the month' instead of a pay raise, some fall for it.”

The deal has been spruiked by Trade Minister Robb as a boon for the services industry in particular. Australia, we have been told, has got the best deal on that barring Hong Kong and Macau.

And indeed, the inclusion of services is definitely a positive. But on closer inspection, some of the commitments in the deal already exist in terms of market access benefits already available to Australian companies.

The agreement on commercial association for law firms and greater access for investment in value-added telecoms are already on the cards in the Shanghai free-trade zone.

Needless to say, the areas China has been willing to bend on closely align with Chinese policy priorities.

Presumably the government has leaked as much good news about the deal as possible.

So between now and early 2016, expect to hear more about the alleged ‘hidden nasties’ that Labor have been warning about.

So far, Mr Robb has received almost universal praise for the deal.

On the Insiders program on ABC on Sunday, Robb was asked if there was any one issue in the deal he could identify that would hurt Australians?

“Well, we have given them zero-elimination of all tariffs on everything,” he said.

“… some people would see that as a cost to us. I see that ... as long as we do it gradually in some areas, so where people are losing protection, they get the chance to transform their operation, transition to some other related area.”

But Joe Hockey, perhaps sick of being the punching bag, gave a more direct answer yesterday.

In a pitch lasting around 45 minutes, the Treasurer made it clear to his parliamentary colleagues that there would not have been any free-trade agreements if he hadn’t cut off industry assistance at the beginning of the year.

“Ending the age of entitlement” was a hard decision he later said in Question Time, but “it needed to be made because as a result of that decision we were able to get free-trade agreements with Korea, Japan and China".

Opposition trade spokeswoman Penny Wong and opposition spokesperson for innovation and industry Kim Carr said they were alarmed by the revelation that support for Australian jobs was used as a bargaining chip in the trade negotiations.

"The Abbott Government is seeking to rip $900 million out of automotive industry assistance, which would lead to an early closure of manufacturers, cutting off opportunities for workers in the supply chain to retrain,” they said.

"On top of this, the Coalition cut $4.1 million in funding set aside for workers affected by the decision of Ford Australia to end local manufacturing operations in October 2016.”

The question for Australians working in sensitive areas such as tinned fruit, car parts, carpets, textiles, clothing and footwear is can they transition in time for the phasing out of tariffs in four years time?

And can Joe Hockey’s rapidly dwindling budget afford another billion dollars’ worth of foregone car levies smashed out of it?

The government would argue that the tariff changes on the Chinese side mean those Australian manufacturers of automotive components who used to supply the domestic industry will be better placed to be competitive suppliers to car manufacturing companies in China.

But while Robb continues to sell the deal in the Chinese capital, businesses and their workers remain in the dark.

Even though Labor have been loudly asking for the text to be produced, when push comes to shove, they aren’t for revealing it.

In the Senate yesterday, a move by the Greens aimed at requiring the Government to table the text was shot down by both the government and the Labor Party.

“Releasing the text now, before it is signed, is the only opportunity for potential changes to the text to occur following democratic public and parliamentary input,” said Greens spokesperson for Trade, Senator Peter Whish-Wilson.

“Labor has been calling for the Government to release the text, but words are cheap. When it comes to action they squib it,” he said.

The way this is going, the government will continue to soften the electorate up with soft news and Labor can continue to bluff their way through.

Activity in China's non-maufacturing sector expanded in November but only slightly higher than the previous month according to a private survey.

The HSBC China Services Business Activity Index printed at 53.0 in November, just nudging up slightly from 52.9 in October.

A reading above 50 indicates expansion, while a reading below signals contraction.

Chief economist, China and co-head of Asian economic research at HSBC, Hongbin Qu, said that new business had improved while outstanding business contracted further.

"The labour market index moderated and price pressures remain subdued. The service sector saw a very marginal improvement in November, alongside sluggish activity in the manufacturing sector” he said.

"We expect the PBoC's recent rate cuts will help stabilize demand in the near term. However, downside pressures on the economy still persist and warrant further monetary and fiscal easing measures in the coming months.”

Earlier, the official non-manufacturing purchasing managers' index (PMI) printed at 53.9 in November, after a read of 53.8 in October.