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"China has made green development a key priority for the Xiongan New Area, and is phasing out low-end manufacturing throughout Hebei province. The region urgently needs to address its environmental issues and may start doing so before urban construction begins," he said in a research note.

"CPI is expected to be on an upward trajectory over the whole year. It may peak at around 2.9 percent in September and October, and fall seasonally in November and December," Yang Xiao, a researcher from Kunming, Yunnan province-based Pacific Securities wrote on Tuesday.

"Caterpillar China has striven to build an integrated system for its mini excavator business, covering local R&D and manufacturing as well as the provision of components and parts," said Chen Qihua, vice-president of Caterpillar and chairman of Caterpillar China.

"But when seven out of 10 customers who come into our showrooms are new-time buyers, buying an additional car or buying their first car, it is not surprising that in China new products are so fundamentally important," he said.

"By then, technologies about lithium batteries and fuel cells will become mature and the prices of new energy resources and renewable resources will see their turning point, as will new energy vehicles," said Ouyang.