China's economy is on the right track

Glenn Stevens, chief executive officer at GAIN Capital. [Photo/China Daily]

Chinese Premier Li Keqiang has expressed confidence in the past few months that China is on track to meet its growth target of around 6.5 percent.

With momentum maintained, inflation remains in check and the People's Bank of China can exercise prudent monetary policy and continue to support economic growth.

In addition, there has been a marked rise in demand, which will also have a positive affect. From a currency perspective, the inclusion of the Chinese yuan in the IMF's special drawing rights basket just before the beginning of this year has been positive.

The yuan is now one of the top currencies traded globally in the foreign exchange markets. And as the exchange rate gains more flexibility, it will become one of the world's most important reserve currencies, rivaling the dollar and the euro.

A2: The Belt and Road Initiative has made progress in the first half of the year. It will continue to play an important role in addressing the manufacturing overcapacity issue in China.

A consumer-fueled economic model outlined in China's 13th Five-Year Plan (2016-20) will provide a growth engine for the country's economy in the second half of 2017 and in the years ahead.

Alongside this, China should continue financial reforms including the full convertibility of the Chinese yuan by 2020.

A3: Strong consumer spending, continued technology innovation and ongoing financial reforms will support China's growth this year. It will also build a solid foundation for doubling per capita income by 2020 from 2010 levels.

The risks lie in maintaining stability within the financial sector, while promoting sound fiscal risk management. Using best practices from other mature economies would be helpful.

A4: Increasing flexibility in the yuan's exchange rate will contribute to China's expanding prominence in the world economy.

Diversifying the country's growth engine with a more consumer-led economy is an important step to ensure stable and progressive development. Continued financial reforms and integration within the global financial system will also help China.

Last month's MSCI's decision to include China's A shares in its index is another example of global markets gaining confidence in the continuous reform of the country's financial system.