China survey sees industrial expansion

"While public investment may moderate in the months ahead, private real estate investment, consumer spending and export demand should drive growth in the coming months," she said in a note to clients.

Ulrich singled out a revival in property construction as developers replenish housing inventories. New starts rose 56 percent in September from a year earlier.

Construction -- infrastructure as well as property -- accounts for a large chunk of China's demand for materials, including 52 percent of steel consumption, which grew 44 percent in September from a year earlier, she noted.

Like other countries, China has started to debate the timetable for a gradual withdrawal of the monetary and fiscal stimulus it injected to support the economy through the crisis.

The government is almost half-way through a 4 trillion yuan (356 billion pounds) pump-priming programme, while the country's mainly state-owned banks have increased their loan books by a third over the past year. In the first nine months of the year they lent a whopping 8.67 trillion yuan ($1.27 trillion).

Ulrich, voicing the consensus view, said a broad-based macroeconomic tightening was unlikely over the rest of 2009.

"Until greater inflationary pressure and a sustained recovery in exports become apparent, pro-growth economic policies are expected to remain in place.

"Messages from the authorities suggest that they are not planning to withdraw stimulus measures in the near term, although the government is clearly fine-tuning policies for sectors that are prone to overcapacity," she said.

That fine-tuning is also taking the form of orders to banks to ease up on the pace of lending. Yu Song and Helen Qiao at Goldman Sachs said this tightening was positive because it would slow credit growth to a rate that was sufficient to fuel the recovery while reducing overheating pressures down the road.

"We expect October activity growth data to continue to show firm readings when they are released on November 11," the economists told clients.