An unexpected contraction of manufacturing in January has raised speculation about the bottomline of GDP growth that the government can tolerate, given the "new normal" situation confrontingChina.

The manufacturing Purchasing Managers Index in January weakened to a 28-month low of 49.8from 50.1 in December, the National Bureau of Statistics reported on Sunday.

Economic expansion of 6 to 7 percent in 2015 and the coming years will be enough to achievethe long-term target in 2020: an economy of more than 80 trillion yuan ($12.9 trillion at currentexchange rates) or double the size in 2010, said Yu Bin, director of the department ofmacroeconomic research at the State Council's Development Research Center.

He discussed the "bottom line" on Monday at a news conference in Beijing, stressing that thegovernment can stabilize growth within a reasonable range this year.

According to Yu, this year and next will be the optimum period to improve structural reforms andmake the growth pattern of the world's second-largest economy more sustainable.

"China's high-speed growth era is over. Limited resources and a polluted environment have leftless room for policy to pursue high-speed development," said Yu.

Given the downside risks, an increasing number of economists believe that the government maycut this year's growth target to 7 percent from 7.5 percent.

Last month's PMI contraction was worse than the market had expected. Most sub-componentsshowed signs of a cyclical slowdown.

"The fall in the official PMI is consistent with our expectations that growth in the first quarter willlikely be weak," said Song Yu, an economist at the Goldman Sachs Group Inc. "The likelihood offurther loosening measures has increased."

HSBC Holdings Plc reported its own manufacturing PMI on Monday, which showed a reading of49.7 in January, down slightly from the flash reading of 49.8 but up fractionally from 49.6 inDecember.

"Although output rose slightly and new orders broadly stabilized, staffing levels were cut for the15th successive month," said a report from the bank.

Qu Hongbin, chief economist in China and the co-head of Asian Economic Research at HSBC,said: "We think demand in the manufacturing sector remains weak and more aggressivemonetary and fiscal easing will be needed to prevent another sharp slowdown in growth".

Liu Qian, deputy director of the China Service Department at the Economist Intelligence Unit,said that a sharp growth deceleration is impossible this year, but deflationary pressure isincreasing in the manufacturing sector as overcapacity persists.

China announced several major economic and financial measures in December 2014 to arrestthe slowdown and jumpstart crucial sectors. Let's take a look at some of the steps taken by thegovernment.

Tougher tax scrutiny

Foreign firms may face tougher tax scrutiny in China, the State Administration of Taxation said onDec 2, 2014.

China would establish a comprehensive system to monitor foreign companies' profitability tocurb cross-border tax evasion.

Prudent monetary policy

China will stick to prudent monetary policy in 2015, according to the Central Economic WorkConference.

The prudent monetary policy should be more focused on elasticity, said a statement released onDec 11, 2014.

Easy access for foreign banks

The State Council published the amended rules to ease market access for foreign banks on Dec20, 2014.

It regulated that China will no longer require a specific amount of operating funds to betransferred from the parent foreign bank to its newly-established Chinese branch from Jan 1, 2015.

Real estate registration

China's cabinet issued provisional regulations on real estate registration on Dec 22, 2014.

The regulations will cover collective ownership of land, ownership of buildings and forests,contracted land management rights, and rights to the use of construction land, homesteads andmaritime areas.

Pension system reform

China's Vice Premier Ma Kai said China will reform its pension system on Dec 23, 2014.

The reform covers staff in government, Party bodies, and public institutions. The detailed ruleswere released on Jan 14, 2015.

Easy access to foreign funds

China is to ease restrictions on outbound investments, a State Council executive meeting saidon Dec 24, 2014.

The country will streamline procedures for domestic companies to launch overseas listings,mergers and bank openings, making it easier for companies planning to operate abroad.

GDP calculation reform

China is to reform its gross domestic product calculations, said Ma Jiantang, director of theNational Bureau of Statistics, on Dec 25, 2014.

Ma said China is accelerating statistical reform to launch a new unified system to calculate grossdomestic product in the nation's regions.

Easy investments in FTZ

China will simplify the approval procedures for foreign companies' business plans in China'sthree new FTZs, the nation said on Dec 28, 2014.

Foreign firms only need to report the plans such as setting up ventures, shutting down andmerging ventures or changing their business purpose to the authorities.

Relaxing banks' yuan trading

The State Administration of Foreign Exchange published a set of new rules to relax banks'foreign exchange trading practices on Dec 30, 2014.

It simplified 14 sets of related regulations and added new provisions.