Manufacturing index points to growing recovery

"Compared with the extent of the after-holiday rebound in past years, the recovery in March was noticeably weaker, resulting in an average PMI of 50.5 in the first three months, the same as the average in the fourth quarter of 2012," he said.

HSBC Holdings Plc also released a separate manufacturing PMI reading based on its own survey, which posted 51.6 in March, up from 50.4 in February and 52.3 in January.

"China's recovery continues, and it is mainly driven by the gradually improving domestic market demand," said Qu Hongbin, chief China economist at HSBC.

"The decline in input prices suggests a modest pace of demand recovery and moderating inflationary pressures. This, plus the lingering external headwinds, implies that Beijing policymakers should keep a relatively accommodative policy stance in place," he said.

Lian Ping, chief economist with Bank of Communications, predicted that industrial output may rebound slightly in March to 10.1 percent year-on-year from 9.9 percent during January and February.

"In the first quarter, industrial production may be described as sluggish, as demand was weak in both the domestic and overseas markets. Also, investment in the manufacturing sector remained far from strong," Lian said.

In the coming few months, investment in infrastructure and properties is likely to accelerate, responding to the government's urbanization boost. With the steady pace of recovery in the US and Europe, this may also help China's overall economy improve, according to Lian.

The economist forecast that China's GDP may grow by 8.1 percent year-on-year in the first quarter, up from 7.9 percent in the last quarter of 2012.

Contact the writers at chenjia1@chinadaily.com.cn and yuran@chinadaily.com.cn