China's economic growth expected to slow to 7% in Q1

(Agencies) Updated: 2015-03-02 10:08

A woman works at a garment factory in Huaibei, Anhui province. File photo provided to China Daily

Liu Ligang, chief economist in China at the ANZ Bank, said that China has started a new cycle of monetary easing, and a further 25 basis point cut in the deposit rate could be seen later this year.

In addition, banks' reserve requirement ratio is likely to be reduced by another 100 basis points in 2015, he said.

How an easier supply of money will be used is a concern for some economists.

"Credit growth has continued to diverge from fixed-asset investment and GDP growth, leading many to question its effectiveness in stimulating growth," said Wang Tao, chief economist in China at UBS AG.

The government should accelerate reform to lower taxes and improve administrative services for enterprises, she said.

A report by the Center for Macroeconomic Research of Xiamen University suggested on Sunday that China should further ease the tax burden by reducing indirect taxes while increasing direct taxes to stimulate growth.

"A tax system in which indirect taxes take the majority share encourages enterprises to pass on the tax to consumers and curbs consumer demand. It is also not conducive for income redistribution," the report said.