China Manufacturing Outlook: Moderate Expansion Likely Ahead

China Manufacturing Outlook: Moderate Expansion Likely Ahead

MAPI study reports domestic investment demand drives growth .

A Manufacturers Alliance/MAPI report, notes that China's economy grew at a healthy 9.6% rate in the first half of 2011, hardly affected by higher commodity prices and the earthquake in Japan.

"The main growth driver continues to be domestic demand, especially in investment," economist Yingying Xu said. "The fixed asset investment, which increased 26% on a year-over-year basis during the first half of 2011, was underpinned by spending associated with a number of investment projects set in motion at the outset of Chinas 12th five-year plan. Real estate investment remained buoyant as well."

MAPI forecasts that final manufacturing sales revenue will show 24% growth in 2011, an increase over the 19% anticipated in its January 2011 outlook.

Sales revenue should climb an additional 20% in 2012.

In 2011, 13 of the 14 industries detailed in the report are anticipated to grow at a slower pace than the record-high expansion levels seen in 2010. Growth in one industry -- food, beverages, and tobacco -- should remain flat. Electrical machinery and apparatus, at 32%, is expected to lead in 2011, followed by chemicals, chemical products, and pharmaceuticals at 31%, and wood products at 26%.

In 2012, wood products are expected to show the most growth at 31%, followed by textiles and apparel at 28%, and by chemicals, chemical products, and pharmaceuticals at 27%.

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