The dust has hardly settled after Beijing released crucial first-quarter economic numbers yesterday and as the government's top statisticians stoically evaded commenting on policy prospects, economists have been free to reason and speculate. For days, the market has been rife with rumours that Beijing may unveil new stimulus measures, on the rationale that if slow growth was reported, as expected, Beijing would probably be compelled to act again. Expectations were spot in. China's gross domestic product grew 6.1 per cent, lagging the 6.8 per cent growth in the fourth quarter last year and the weakest growth since quarterly records began in 1992. National Bureau of Statistics spokesman Li Xiaochao described the growth as 'better than expected', due to stimulus measures launched since October last year. Yet, he was cautious about prospects and refrained from making any judgment about where the economy is heading. Many economists agree the economy has improved markedly over the past few months. Compared with the January-February period, the decline in exports and imports slowed last month. Fixed-asset investment rose and retail sales fared well as Beijing's policies to spend lavishly on infrastructure works and help boost farmers' purchasing power showed early signs of paying off. The widespread optimism does not eliminate debate over the necessity and possibility China will launch a new stimulus package in the near future. Many economists expect no further stimulus as they say earlier measures are having an impact. 'There is no need for additional fiscal policy stimulus in the near term after the better than expected first-quarter performance,' said Morgan Stanley economist Wang Qing. In November, the government announced a 4 trillion yuan (HK$4.54 trillion) stimulus package with most of the funds to be spent on infrastructure, construction of affordable housing and other projects. The government has also launched tax reduction and exemption policies to help hard-hit companies, and announced schemes to assist affected industries. 'Maintaining the status quo of fiscal and monetary policy should lead the economy further along its recovery path,' Mr Wang said. A loosened monetary policy has improved liquidity. New loans extended by mainland banks hit a new high of 1.89 trillion yuan last month after 1.07 trillion yuan of loans were extended in February and 1.62 trillion yuan in January. The runaway speed of 25 per cent loan growth in the first quarter has fuelled worries that Beijing may tighten money supply to prevent bad loans and an asset bubble from forming. 'I don't expect any meaningful shift in monetary policy near term. The sufficiently loose stance will be kept until an economic recovery is firmly under way, which should materialise by mid-year,' Mr Wang said. He expects a 27-basis-point interest rate cut this quarter and a further pruning of banks' required reserve ratio if warranted by liquidity needs. Ha Jiming, an economist at China International Capital Corp, says there might be a policy vacuum before this month's data is released. 'The economic improvement will reduce the possibility of the government issuing a new round of stimulus policies. The emphasis will probably be on implementing already issued policies,' Mr Ha said. 'If new loans continued to increase significantly in April, the loose monetary policy may be fine-tuned to balance the short-term goal of keeping economic growth and long-term goal of combating inflation.' Some economists disagree. Frank Gong, an economist at JP Morgan, who rightly predicted the 4trillion yuan spending spree, said first-quarter GDP growth might disappoint national policymakers who are striving to achieve 8 per cent growth for this year. 'As the authorities acknowledged that recovery in the domestic economy is still young and the external environment remains tough, they could come up with further stimulus measures to support economic growth in the near term,' he said. The authorities' focus recently had been on stimulating China's domestic consumption in the near and medium term, he said. Policymakers will likely consider drawing up further measures to stimulate near-term consumption. Beijing has announced several sector-specific measures in recent months, including subsidising rural families' purchases of home appliances and tax cuts on vehicle purchases. Tax cuts for low-income individuals and households are also possible. Policymakers are also focusing on increasing spending to improve social infrastructure. To stabilise expectations, boost confidence and encourage consumption, they would look at more measures to support the local equity market and spur property transactions, Mr Gong said. On monetary policy, he expects two more 27-basis-point rate cuts this year, one in the second quarter and another in the third, bringing the one-year benchmark lending rate down to 4.77 per cent. Others such as HSBC China economist Qu Hongbin hold views that are somewhat in between. 'Beijing will likely focus on implementing existing projects and programmes rather than launching a new stimulus near term,' Mr Qu said. 'If the situation deteriorates at some point, apart from increasing infrastructure spending, further stimulus will likely focus on boosting consumption, such as increasing financial help to the unemployed and rural families, building more public housing, schools and hospitals, or even supporting property markets. 'In sum, with the stimulus filtering through, we expect economic growth to be lifted above 8 per cent in the second half.' All the views sound right to some extent. At a State Council meeting last night, Premier Wen Jiabao said China should stick to the expansionary fiscal policy and loose monetary policy, as 'the foundation for economic recovery is still not stable'. He called for a good implementation of previous stimulus policies and laid out key tasks for the near term - ensuring central government funding to infrastructure projects, spurring private and foreign investment, boosting consumption by residents, stabilising exports, among others.