China's economy off to good start in Q1

BEIJING — China's economy was off to a good start in the first quarter of this year with recovering economic vitality and market expectations, the top economic planner said Thursday.

Strong optimism

"Following a positive trend in the second half of last year, the Chinese economy maintained stable yet progressive momentum," said Yan Pengcheng, spokesperson with the National Development and Reform Commission (NDRC), citing latest indicators.

China's electricity use, an important indicator of economic activity, rose 6.9 percent in the first quarter of the year to 1.45 trillion kilowatt hours, he revealed at a press conference.

Yan especially noted that high-tech industries saw rapid rises in power use, with information transmission, computer services and software sectors recording 13.3 percent growth in energy consumption.

Meanwhile, China's railway freight volume climbed 15.3 percent in the first three months, and the manufacturing purchasing managers' index came in at 51.8 in March, staying above 51 for a sixth consecutive month, according to Yan.

The country's economic growth for the first quarter is scheduled to be released by the National Bureau of Statistics (NBS) next Monday, which is largely expected to be around 6.8 percent.

The government trimmed its 2017 growth target to around 6.5 percent, the lowest in a quarter of a century.

Remaining instability

Despite optimism on first-quarter growth, Yan said the stability and sustainability of the momentum remains to be observed, as China's economic development is still restrained by a few external and internal factors and the issue of structural imbalance.

He drew particular attention to the influence of commodity prices in the international market on China's domestic prices.

China's consumer inflation grew mildly in the first quarter on the back of a firming economy, fresh NBS data showed. But the producer price index (PPI), measuring cost of goods at the factory gate, jumped 7.4 percent year-on-year.

Yan said the strong PPI growth was mostly driven by the carry-over effect of last year's price changes and a rise in factory-gate prices in several industries such as coal and steel-making.

He expected PPI growth to peak in the first quarter as China's aggregate demand will level off in the following quarters, given China's stable economic performance.

But future changes in commodity prices in the international market will add uncertainty to the domestic PPI trend, he said, citing recent oil price upswings due to conflicts in the Middle East.

Planning for?Xiongan New Area?

Yan said the NDRC will next push the drafting of detailed plans for building the Xiongan New Area, which was brought into the public spotlight after the government announced it will create a brand new economic zone earlier this month.

The blueprint will highlight both "international standards" and "Chinese characteristics," drawing talent from home and abroad and international experience to build the area, he said.

On April 1, China announced plans to create Xiongan New Area, a new economic zone about 100 kilometers southwest of Beijing. The new area spans the counties of Xiongxian, Rongcheng and Anxin in Hebei, and is home to Baiyangdian, a major wetland in northern China.

The new area will initially cover around 100 square km and expand to 2,000 square km in the long term.

Besides plans for the 100-square-km initial zone and the overall development of the Xiongan New Area, a specific plan for pollution control and environmental protection of Baiyangdian will be drafted as part of the blueprint, according to Yan.

The top economic planner promised to provide policy and funding support for the new area's major projects in transportation, ecology, water conservation, energy and public services.

Nationwide, the NDRC has approved 56 fixed-asset investment projects with total investment reaching 240.9 billion yuan (about $35.04 billion) in the first quarter, mainly covering water conservation, energy and transportation sectors.