Service sector offsets weak factory output

The December services PMI released by the NBS climbed to 54.1, a four-month high, up from 53.9 in November and 53.8 in October.

As the service sector continues its rapid expansion, Zhao Qinghe, a senior economist at the NBS, said it has become a driving force behind the overall economy, which is now steadily adjusting to what the government calls a "new normal" of slower economic growth.

Wang Tao, chief economist in China at UBS AG, expects the upcoming December data "to show a still-frail economy, tepid production momentum, and mounting deflationary pressures".

She is expecting GDP growth to have slid further from the third quarter's 7.3 percent year-on-year to 7.1 percent in the fourth quarter, taking full year growth to 7.3 percent.

The NBS will release the December and full-year economic indicators on Jan 20.

Lian Ping, chief economist at Bank of Communications Co Ltd, is forecasting that GDP growth will be 7.2 percent in 2015, slightly lower than growth in 2014.

"As China undergoes economic restructuring, secondary industries will account for a smaller proportion of the economy and the lack of industrial demand will cause price drops in raw materials," Lian said.

He is also predicting that the Producer Price Index will see significant negative growth in the first half of this year, but the decline will slow down in the second half.