Report predicts 8% China Q1 economic growth

BEIJING - China's economic growth will continue to rebound moderately in the first quarter this year amid the government's pro-growth policy and a slowly recovering global economy, according to a think tank report released on Wednesday.

The State Information Center (SIC) said in the report that the country's gross domestic product will grow 8 percent year on year in the January-March period, following the rising momentum seen in the last quarter of 2012.

The full-year increase will edge above the 7.8-percent growth rate of 2012, the report predicted.

The SIC forecasted that investment, especially in infrastructure construction, will provide major impetus for economic expansion this year, citing the likelihood of massive follow-up investment in 2013 after the 30.9 trillion yuan ($4.92 trillion) pumped into newly approved projects last year.

In breakdown, investment in fixed assets will jump 21 percent year on year in the first quarter, with infrastructure construction expected to attract 20 percent more funds than that of the same period last year.

In addition, property investment will increase 16 percent year on year in the first quarter amid the warming housing market and tightening curbs like property tax and purchase restrictions.

Money invested in the manufacturing sector will see a year-on-year increase of 22 percent, 2.8 percentage points lower than the growth rate of same period last year and in sharp contrast with the 27.6-percent annual increase in the past five years.

The SIC attributed the sluggish manufacturing to overcapacity and difficulties enterprises met in raising funds, problems which are haunting industries including iron and steel, non-ferrous metal, construction material, ship making, wind power equipment and polysilicon.

The report also predicted year-on-year growth of 8 percent and 6 percent in export and import, respectively, lifted by the slight pick-up in the world economy but still challenged by uncertainties resulting from the appreciation of the yuan.

Industrial output will grow by 10.5 percent year on year in the first quarter, with the heavy industry up 10.9 percent and light industry up 9.6 percent, according to the report.

Meanwhile, the consumer price index, a main gauge of inflation, is expected to grow 2.6 percent driven by relaxed market liquidity and rising production costs, the center said.

The SIC predicted the producer price index will decline 1.7 percent year on year, recovering from the 1.9-percent decrease in December due to the warming domestic economy and gaining international bulk commodity prices.

The center also advised the government to implement a steady monetary policy, step up the internationalization of the yuan and shut down backward production facilities in a bid to address the current economic risks.

In the third quarter of 2012, China's economic growth slowed to 7.4 percent, the weakest reading since the second quarter of 2009, dragged down by domestic woes and the global economic downturn.

It then quickened to 7.9 percent in the fourth quarter upon government pro-growth measures, bringing the full-year figure to 7.8 percent, according to data from the National Bureau of Statistics.