BEIJING, May 13 -- Economic date in April suggested China’s policymakers to continue fine-tuning policies to support the tepid economic recovery.

 

China's consumer price index (CPI), a main gauge of inflation, grew 2.4 percent year on year in the month, up from 2.1 percent in March, the National Bureau of Statistics (NBS) said.

 

In April, food prices, which account for nearly one-third of weighting in China's CPI, increased 4 percent year on year, with the prices of vegetables rising 5.9 percent, NBS data showed.

 

On a monthly basis, consumer prices in April edged up 0.2 percent.

 

Liu Ligang, chief economist with Greater China at ANZ Bank, expected China’s CPI growth in May to stay below 3 percent and gradually pick up pace in the latter half of the year due to a low year-ago comparison base.

 

"But given the subdued momentum in the economic recovery, the CPI will not see rapid gains this year," he added.

 

Given the weak growth activity and relatively subdued inflation, China may bend towards looser monetary policies to keep liquidity flowing to nurture the recovery, while proceeding with structural reforms to sustain long-term growth, Liu said.

 

NBS data also showed China's producer price index (PPI), which measures wholesale inflation, fell 2.6 percent year on year in April, marking the 14th straight month of decline and the steepest drop in six months.

 

Zhao Yang, an analyst at the China International Capital Corp (CICC), said the drop in PPI eased inflationary pressure, but the steady decline also prompted warnings that Chinese manufacturing sector might be entering a period of deflation, a potentially dangerous phenomenon.

 

Falling prices of industrial products will lead producers to put off investment and production, and suspend purchase of raw materials, said Zhao.

 

As demand from Chinese companies shrinks, the aggregate demand of the economy will be less, Zhao added.

 

The country's economic growth unexpectedly dipped to 7.7 percent in the first quarter, falling short of market expectations and suggesting a continued tepid economic rebound for the world's second-largest economy.

 

Some investment gurus expressed pessimism about the Chinese economy and short sold Chinese stocks, with Fitch led the chorus by cutting China's sovereign credit rating earlier in April, citing "underlying structural weaknesses."

 

However, analysts say China's slower growth, down from 7.9 percent in the final quarter of 2012, is still above the 7.5-percent full-year target for 2013 set by the government in March.

 

The Chinese government is keen on pushing reforms and has prioritized balance over speed, and quality over quantity, they say.

 

According to survey results issued last Tuesday by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), the Chinese economy has become more stabilized with its slowdown ended.

 

The survey, polling 2,000 financial professionals working in companies of various sizes, showed market confidence in China has been recovering.

 

China's economic slowdown has become more manageable since pressures on cash flows and new orders lessened at the beginning of 2013, the ACCA and IMA survey said.

 

Experts believe that China has made a smart move by slowing the economy a little to ensure better quality and efficiency, while keeping macroeconomic stability. However, to further the recovery, policymakers should continue to fine-tune policies.

 

In face of the complicated international economic situation and the new problems arising from the domestic economic recovery, China should watch closely and adjust timely, according to Zhang Liqun, an analyst from the State Council's Development Research Center.