The mainland market saw a 1.25 percent setback on Tuesday, with the Shanghai Composite Index falling below 2,300 again, suggesting investors are still to be convinced of the promised economic recovery.

Experts suggest the market is likely to remain flat until mid-April, when the government releases data about the quarterly economic performance.

Analysts share the view that year-on-year GDP growth is unlikely to climb past 8 percent in the first quarter of 2013, from 7.9 percent in the last quarter of 2012.

Although there will be a recovery, said Li Huiyong, economist of Shenyin & Wanguo Securities, "the current round of recovery will be different from before, in that there probably will not be any sharp rise in the index".

Instead, he said, investors will see more small ups and downs in a prolonged process of a few months when the Shanghai Composite Index fluctuates within a narrow range.

From now on, he said, the macroeconomic background for the Chinese capital market will be around 8 percent GDP growth, and 3 percent inflation.

"That will become a lasting, normal state."

Lu Zhengwei, chief economist of the Industrial Bank, also said this time is different.

Although a fair number of new fixed-asset investment projects are approved by the National Development and Reform Commission, and many local governments are as eager as ever before to pursue their high growth goals, the current fiscal and monetary policies are no longer so lenient.

They allow for only a mild recovery, Lu pointed out.

Investors must learn, as the whole economy must, to adapt to the fact that they will no longer hear such news as that the economy is racing ahead at a speed of more than 10 percent year-on-year.

Government agencies are expected to start releasing quarterly figures on April 8 to 15.

Frankly, other than the excitement from an orderly transition of power at the NPC annual session in early March, many old difficulties remained for the economy in the first quarter.

The economy is in a transition, as officials candidly admit. And that has to be a long process.

One major uncertainty for A-share investors will be mixed prospects for the real estate industry in the months following the first quarter.

Having to match the five new requirements issued on Feb 20 by State Council, the Chinese cabinet, many local governments will take action to strengthen housing price controls, which could put a dampener on transactions.

So again, real estate developers can't be expected to lead growth in the remainder of the year.

According to Peng Wensheng, chief economist of CICC, a Chinese investment bank, having seen at least a 50 percent year-on-year growth in the sales of commercial housing units, the real estate industry would have contributed more than it did before to the GDP growth in the first quarter.

However, the central bank's money supply target, namely an annualized increase of 13 percent for 2013, would still be lower than the first quarter's level (estimated at 15 percent).

The tightening of the credit line will inevitably hurt housing sales, along with other price control policies, Peng said in his commentary published on Monday.

At the same time, the Chinese-language media quoted a report from China.org that more housing price control rules are being worked out by the Ministry of Housing and Urban-Rural Development and other central government agencies, to protect families from a true housing crisis.

If a solution is worked out, it may help developers sell more housing units.

But as to how that will exactly happen, it is still too early to tell.

edzhang@chinadaily.com.cn

(China Daily 03/27/2013 page14)