China HSBC flash PMI hits 2-year high in January

Many analysts are cautiously optimistic about China's economic prospects this year and are betting on steady state investment to stabilise growth. Exports, however, are expected to remain a drag.

A Reuters poll this week showed analysts predict China's annual economic growth would rebound a shade to 8.1 percent this year.

But faster growth is also expected to fuel inflation.

While a majority of the 24 analysts polled by Reuters believed China would not change its monetary policy this year, a third of them thought the central bank could raise interest rates in the second half of 2013.

Thursday's flash PMI showed price pressures may be building. The input price sub-index was at its highest since September 2011, while the output price sub-index pulled back slightly.

HSBC said its PMI survey is based on a poll of purchasing executives from over 420 manufacturing firms, and that the flash PMI is compiled from responses from 85 percent to 90 percent of that pool.

But in a sign that China's recovery could be uneven, German engineering conglomerate Siemens AG warned on Wednesday that demand from China was likely to remain weak for the coming months after it saw global orders for industrial automation and drive technology slide in its first quarter.

"The United States and Germany developed well, but China's demand as an industrial country will pick up again in the second half of the year at the earliest," Siemens' finance chief Joe Kaeser told journalists.