By Deng Yusong, Research Fellow and Deputy Director-General of the Institute of Market Economy, DRC China Economic Times,

2017-03-10

In face of the volatile international economic situation in 2017, China's economic development fundamentals remain relatively sound and the annual economic growth will stand at around 6.5%. Since 2016, with the work to cut overcapacity and excess inventory, deleverage, reduce costs, and strengthen points of weakness achieving some results, and when prices pick up in industries with overcapacity and high debt ratio, we need to seize the favorable opportunities to deepen the supply-side structural reform, reduce corporate leverage ratio and promote structural adjustment.

Changes in different stages of economic development actually reflect the transformation of economic structure and development momentum. In 2012, the proportion of China's service industry overtook that of the secondary industry, becoming a major industry for the first time in history. Economic development is transforming from an industry-oriented mode to a service industry-oriented pattern. With the total area of newly started housing projects and the steel production reaching the ceiling, the economic growth momentum of heavy industry that used to be a strong driver for economic performance has resumed a normal speed. In the short and medium term, we need to take the initiative to adapt to the changes in the current development stage, steadily push forward economic transformation, and realize the essential transformation from an expansionary development on a large scale to a development mode focused on quality improvement.

We need to further deepen reform and strive to build a new pattern of economic development. The key for economic transformation and the building of a new pattern of economic development lies in deepening reform. We need to pay more attention to deal with the relationship between the government and the market, cultivate new economic growth momentum through the re-optimal allocation of elements and realize the replacement of economic growth drivers. Only in this way can we lay an institutional foundation for the healthy and sustainable development of economy.