Analysts had expected growth in gross domestic product (GDP) to pick up from the third-quarter's 4.9% pace due to a slew of policy support measures, but have cautioned more stimulus is likely needed to get activity on more sustainable path.

The world's second-largest economy has struggled to mount a strong post-COVID bounce, burdened by a protracted property crisis, weak consumer and business confidence, mounting local government debts, and weak global growth.

Recent data suggested the economy was starting 2024 on shaky footing, with persistent deflationary pressures and a slight pick-up in exports unlikely to kindle a quick turnaround in weak domestic activity. December bank lending was also weak.

KEY POINTS

* 2023 full-year GDP growth +5.2% (versus target of around 5%)

* Q4 GDP +5.2% y/y (f'cast +5.3%, Q3 +4.9%)

* Q4 GDP +1.0% q/q s/adj (f'cast 1%, revised Q3 +1.5%)

* Dec industrial output +6.8% y/y (f'cast +6.6%, Nov +6.6%)

* Dec retail sales +7.4% y/y (f'cast +8.0%, Nov +10.1%)

COMMENTARY:

WOEI CHEN HO, ECONOMIST, UOB, SINGAPORE

"The full-year numbers were in line with expectations ... but the December numbers were mixed. Overall, I think the data, especially from the property side, is not looking good. Property sales weakened worse than November levels.

"I think markets were disappointed they didn't cut interest rates on Monday, but it seems they are thinking about more targeted measures. The property issues are not fixed by broad-based rate cuts."

KEN CHEUNG, CHIEF ASIAN FX STRATEGIST, MIZUHO BANK, HONG KONG

"GDP data came within market expectations, and December activity indicators were supported by base effect, while consumption remained relatively weak.

"I think markets focus more on the property data, and are keen to gauge when the sector will recover. Meanwhile, credit growth was still tepid.

"On monetary policy, I think China will take a 'wait-and-see' approach largely due to renewed yuan depreciation pressure. It will wait until the U.S. Federal Reserve offers a clearer monetary easing trajectory."

BACKGROUND

* China's economic growth is likely to slow to 4.6% in 2024, and cool further to 4.5% in 2025, a Reuters poll showed, raising the heat on policymakers to roll out more stimulus measures amid deflationary pressures and a severe property slump.

* The People's Bank of China (PBOC) has pledged to step up policy support for the economy this year and promote a rebound in prices.

* But the PBOC faces a dilemma as more credit is flowing to productive forces than into consumption, which could add to deflationary pressures and reduce the effectiveness of its monetary policy tools.

* On Monday, the PBOC left the medium-term policy rate unchanged, defying market expectations for a cut as pressure on the yuan currency continued to limit the scope of monetary easing.

* Analysts polled by Reuters expected the central bank to cut the one-year loan prime rate (LPR) -- the benchmark lending rate -- by 10 basis points (bps) in the first quarter.

* The PBOC may also cut banks' reserve requirement ratios (RRR) in March-April, if economic indicators continue to weaken, Wen Bin, chief economist at Minsheng Bank, said in a note.

* The government, which in October unveiled 1 trillion yuan in sovereign bonds to fund investment projects, is likely to press ahead with more fiscal spending to drive growth, analysts said.

(Reporting by Reuters Asia bureaus, compiled and edited by Sherry Jacob-Phillips)