Economic Watch: Chinese economy shows signs of firming, pressure remains

China's economy, a vital engine of global growth, has showed more signs of firming, reinforced by a string of upbeat data, but domestic and external uncertainties may weigh on future growth.

The stronger-than-expected results from surveys on China's manufacturing and non-manufacturing sectors were the highlight of recent economic data, which largely beat expectations.

China's manufacturing sector in March stayed above the boom-bust mark for the eighth month in a row, and the non-manufacturing sector continued to expand, nearing a three-year high, data from the National Bureau of Statistics showed.

The firming trend in the first quarter was also supported by rising corporate profits, rail freight volume, and machinery sales, a barometer of new infrastructure.

Sales of excavators in March rose more than 55 percent year on year as the Chinese economy gained momentum, and for the January-March period, sales soared nearly 99 percent from a year earlier, according to China Construction Machinery Association.

Meanwhile, business confidence among China's entrepreneurs improved in the first quarter of 2017 as the economy firmed. The entrepreneur confidence index grew to 61.5 from 54.1 the previous quarter, a central bank survey showed in March.

The projection of China's economic growth from international organizations also showed their confidence. Goldman Sachs forecast in its report that the Chinese economy is likely to remain solid in the first quarter of this year, growing 6.8 percent from a year earlier.

China's economic growth has firmed up, with initial signs showing solid growth, said Zhang Liqun, a researcher with the Development Research Center under the State Council.

China lowered its 2017 growth target to around 6.5 percent, the lowest target in a quarter of a century. The economy expanded 6.7 percent in 2016, its slowest growth in 26 years.

Zhang said market demand at home and abroad is stable and production has continued to recover, while pressure on the production of manufactured goods has eased.

Wang Hongju, a researcher with the National Academy of Economic Strategy, agreed, noting that the upbeat data shed light on the country's economic restructuring progress.

Progress has been made as China tries to shift its economy toward a growth model that draws strength from consumer spending, innovation and services, said Wang.

More should be done to advance supply-side structural reform and move ahead to cut overcapacity, deleverage, destock, lower costs and improve weak links, Wang added.

In addition, the government has also stepped up efforts toward risk control since the start of the year as the country has vowed to build a "firewall" to fend off financial risks, with sharp vigilance over non-performing assets, bond defaults, shadow banking and Internet finance.

While most data in the first quarter suggested resilient growth, officials and analysts pointed out some potential areas of concern.

Lian Ping, chief economist at the Bank of Communications, warned about strong headwinds from growing uncertainty in the domestic and external environment, adding that the foundation for economic improvement at home needs to be consolidated.

He said that the property market correction may affect development in sectors including building materials, furniture and home appliances, and thus weigh on future growth in the second half of the year. Endi