Balance economic growth and restructuring(2)

Institutional barriers remain on the road of the sector's development, though. As reforms deepen, restrictions of the market accession will be gradually loosened and price control will be lifted step by step. By doing this, the services industry will increasingly gain momentum and become a new engine to drive the country's economic growth.

Second, domestic consumption is growing steadily and smoothly in China. Total retail sales of consumer goods in January-February saw a year-on-year increase of 10.7 percent, with a real growth of 11 percent (adjusted for inflation), up 0.2 percentage points compared with the same period of last year, and 0.1percent than in 2014.

Third, national income growth is catching up. In the past, residents' income had long been growing slower than GDP. But such a trend is now reversing. For the last two years, income growth in both urban and rural areas has outstripped that of GDP, and income distribution has become more labor-friendly, which contributed greatly to domestic consumption.

Fourth, manufacturing upgrading and innovation have been on fast track. While traditional sectors are undergoing deep reforms, new industries and business formats are springing up. That's a bitter-sweet process, and exactly the characteristics of an economy in a period of deep changes.

Economic slowdown is inevitable at a time when old industries are under deep reforms but new growth points have yet to take shape. That's the fundamental reason why Premier Li has lowered GDP target to around 7 percent this year.

Macro-economic policies aim to ensure steady growth amid restructuring, but the key is actually to restructure and transform the growth model. It's essential to avoid the middle-income trap.

In the past, steady growth was the top priority, and everything else came second amid mounting downward pressure. But it didn't turn out good: economic growth continues slowing down, while restructuring became even more difficult.

China's new leadership, however, stood up the pressure and decisively refrained from strong stimulus measures. Their focus is on restructuring and promoting reforms, the key point being to strike a proper balance between ensuring steady growth and making structural adjustments.

For instance, they are stepping up efforts to increase public investment, improve rural water conservancy and rebuild shanty towns. Not only can it prevent sharp investment slowdown amid the in-depth real estate adjustments, but shore up economic weaknesses and optimize the economic structure.

Moreover, the leadership is bolstering infrastructure construction in central and western regions which will greatly boost investment and drive up local economic development, bridging the gap between eastern and western regions.

The Chinese government has also been cutting the red tape and delegating more powers to lower-level governments, speeding up the reform of investment and financing system, promoting reform and opening up of the services industry, which can vitalize the market and the society, and create favorable environment for the services sector and entrepreneurial activities.

Another good news is exports rebounded in January-February with an increase of 15 percent year on year, a much rosier picture compared with the same period of last year when exports decreased 1.7 percent. This factor taken into consideration, the first-quarter GDP growth is expected to be above 7 percent.

The author Wang Xiaoguanga is researcher and vice director of the Department of Policy-making Consultation of the Chinese Academy of Governance.