China economic growth falls to 6-year low on weak property investment

China's first-quarter economic growth declined to a six-year low with persistent weakness in key sectors, forcing the country to go for more policy easing.

In the first quarter, China's gross domestic (GDP) growth slowed to 7.0% year on year, the slowest quarterly growth since the first quarter of 2009. The weak growth is largely attributed to slower investment growth weighed down by the property sector.

Sequentially, the economy grew 1.3% in the first quarter, down from 1.5% in the fourth quarter of 2014.

The industrial production slowed to the lowest since 2008, and the fixed asset investment dropped to the lowest level in record. The real estate sector, which is another key sector in the economy, saw property investment rising an annual 8.5%, the weakest rate since 2009. Property investment amounts to up to 20% of China's total fixed asset investment.

The weak data comes despite a new round of supportive policies launched since late February. Therefore, analysts expect further easing measures from the country.

"As growth slows and deflation risk remains, further easing in the monetary policy can be expected," said economists from ANZ bank, who forecast that China will cut reserve ration by 100 basis points and deposit rate by 25 basis points in the next two quarters.

On the property market, China announced significant property easing measures in late March, including lowering the down payment for second home purchase and reducing the housing transaction tax. Before this policy move, in September 2014, the central bank relaxed the criteria for 'first-time home buyers'.

The analysts expect China's investment cycle to pick up strongly in the second quarter with the easing measures in the property sector.