(Yicai Global) April 13 -- China’s economy may expand by between 8 percent and 9 percent this quarter, led by manufacturing investment and consumption, according to a Yicai Global survey of chief economists.

Economic growth will slow from the first three months of the year, when gross domestic product may have hit 19 percent to 20 percent, as a result of the year-earlier baselines, the economists said.

China’s GDP contracted 6.8 percent in the first quarter of last year following the outbreak of the coronavirus and gained 3.4 percent in the second quarter as the recovery got underway.

The National Bureau of Statistics is scheduled to publish GDP data for the three months ended March 31 on April 16.

The economy will continue to grow on a month-by-month basis due to the carry-on effect of earlier monetary easing and proactive fiscal policies as well as a controlled shift in macroeconomic policy, the economists said.

Consumption will continue to pick up this quarter, with two big public holidays, the Qingming Festival and the week-long Labor Day break, while manufacturing will overtake infrastructure and real estate to become the main focus of investment, according to Wu Chaoming at Caixin Securities.

Investment in manufacturing will grow strongly, but is unlikely to propel the economic recovery for long, said Wang Jun at Zhongyuan Bank. Property investment remains constant with strong sales and low inventory and is likely to stay high in the current quarter.

Commodity prices will continue to increase, said Zhang Yu, chief macro analyst at Huachuang Securities. The domestic real estate market is doing well, the vaccine roll out is well underway and US firms are restocking, boosting short-term exports.

Inflation

Higher commodity prices posed a risk of imported inflation in the first quarter. The Producer Price Index, a key measure of industrial profitability, ticked up 4.4 percent in March from the same period last year to the highest level in over two and a half years, while the Consumer Price Index, a main inflation gauge, nudged up 0.4 percent.

Monetary policy is unlike to change despite looming inflation, the economists said. This is because the hike in PPI is caused by external inflationary pressures and the tightening of domestic monetary policy will have no effect, Wu said. Also, the domestic economy still needs support. There remains modest demand in consumption and investment as reflected in the low growth of the CPI. Therefore, monetary policy will not change suddenly, and interest rates and the reserve requirement ratio will not be raised.

The value-added industrial output at large companies with an annual turnover of more than CNY20 million (USD3 million) jumped an average 8.1 percent in January and February this year and last, the fastest pace since 2015.

The Purchasing Managers’ Index for Manufacturing surged 51.9 percent in March from a year ago, the highest level in 13 months, and 1.3 percentage point up on February, according to the National Bureau of Statistics.

M2 broad money supply rose 9.4 percent in March from a year earlier to CNY227.65 trillion (USD34.76 trillion), 0.7 point down on February, according to figures released by the People’s Bank of China yesterday.

Social financing in the first quarter was down 7.8 percent year on year to CNY10.24 trillion (USD1.56 trillion), but it still represented the second-highest quarterly increase, according to PBOC spokesperson Ruan Jianhong.

Editor: Kim Taylor