Focuses

Two priorities should be given to the Chinese economy in the second half. First, domestic demand should be expanded by stimulating consumption and investment. Second, deeper reform should be rolled out in cutting red tape and putting more power in the hands of lower-level governments to create more efficient economic growth, said Zhang.

He said maintaining stable growth should not rely on a one-off fiscal and monetary stimulus package, but rather combine sustaining growth with pushing forward transformation of the country's growth pattern.

After three decades of breakneck growth, the Chinese economy has come to a stage where there is a need to restructure the economy away from its dependence on exports and manufacturing to one bolstered by consumption and services, which requires careful handling to maintain stable growth. On the one hand, the economic growth rate is declining; on the other hand, urgently needed restructuring and reform are a drag on growth.

Guo Shiliang, a financial commentator, said areas to watch in the Chinese economy for the remainder of the year are the real estate market and overcapacity. The meeting vowed to "promote the stable and healthy development of the real estate market," a deviation from the previous stance of "further regulating the real estate market."

Guo thinks this shows China's intention to maintain economic growth by developing the real estate sector. As a pillar industry, the property market contributed 17 percent to government fiscal revenues. Also, the 42 industries and over 100 downstream industries associated with the real estate sector are the backbone for the national economy.

"The new attitude toward the real estate market is seen as a major transition in China's property curbs. It's an opportunity to let the real estate market be subject to market self-adjustment," said Guo.

Industrial adjustments are a major means for the Chinese government to upgrade the economy. Guo said the meeting sets the priority at solving excess capacity. Data from the Ministry of Industry and Information Technology show that iron, steel, cement and electrolytic aluminium are all in a state of overcapacity.

At the meeting, the top leadership pledged to transform the structure of many traditional industries, develop strategic emerging industries and accelerate the development of the IT and the service sectors.

"This will not only lower energy consumption and reduce pollution, but also create new growth drivers and push forward the upgrading of the country's economy," Guo said.