Data points to firm economic growth on the mainland but doubts remain

As more economists join the bull camp in predicting a continued economic recovery on the mainland, a few are seeing amber lights flashing ahead.

Given the tricky global economic situation, and as demand at a number of industries has failed to pick up, they argue it is difficult to interpret the country's outlook despite a recent flurry of encouraging data. Indicators from manufacturing to exports issued in the past month prompted many China watchers to conclude a firm rebound is under way, with some even expecting an upside surprise.

Exports rose 11.6 per cent in October from a year earlier, faster than September's 9.9 per cent rise, and beating market expectations. HSBC's flash purchasing manufacturing index rebounded to a 13-month high, and industrial output rose to 9.6 per cent from 9.2 per cent a month earlier. Industrial profits jumped 20.5 per cent from a year ago, far outpacing September's 7.8 per cent gain.

As the mainland's economic growth has weakened since early 2009, the government took steps to prop it, including cutting interest rates in June for the first time since 2008, lowering the required reserve ratio at banks to free up cash for lending and fast-tracking certain infrastructure projects such as high-speed railways.

Chen Dongqi, a vice-director at the Academy of Macroeconomic Research under the National Development Reform and Commission, said economic growth might speed up to 7.8 per cent in the fourth quarter from 7.4 per cent in the third and 7.6 per cent in the second, largely driven by infrastructure investment in the past few months.

But officials from some industries appear less optimistic, and judging by the weak performance of the stock market, investors, too, are sceptical.