A senior official denied that plans are in the works to make Xi'an China's fifth municipality.

Du Ying, vice-minister of the National Development and Reform Commission, said on the sidelines of a press conference on Thursday that he was unaware of such a decision.

Talk began to swirl after the Gansu Daily erroneously quoted an economist on Thursday saying that Xi'an, capital of Shaanxi province, had been designated to become a municipality directly under the central government.

The report aroused concern, cheered local residents and pushed up share prices of Shaanxi-based companies, but the newspaper admitted later in the day it had been a mistake.

Nevertheless, residents in China's Northwest were caught up in the prospects of Xi'an becoming as important as China's other municipalities: Beijing, Shanghai, Tianjin and Chongqing.

"The central government would provide more support if Xi'an becomes a municipality, which would be a great boost to our economic and social development," said Xue Zhenwu, a 25-year-old company employee in Xi'an.

Yet some people, like Zhou Yifeng, a post-graduate student at a local university, began to worry that housing prices would rise and they would suffer like the residents in the other municipalities.

However, experts believe that Northwest China does need a city to take the lead in the area's development, as Chongqing municipality and Chengdu, capital of Sichuan province, have done for Southwest China.

"Xi'an would be the most suitable city to lead the development of Northwest China," Wei Houkai, director of the center for China's regional development at the Chinese Academy of Social Sciences, told China Daily.

But compared to other cities, Xi'an still lags in infrastructure and industrial development and is not ready to perform that leading role, he said.