An assembly line of Inner Mongolia North Hauler Joint Stock Co. Ltd. in Arxan, north China’s Inner Mongolia Autonomous Region (XINHUA)

Resilient Growth Against Adversity

After GDP growth leveled off at 7 percent during the first half and then dipped to a six-year low of 6.9 percent in the third quarter, China's economy showed signs of rebounding in the fourth quarter. November saw the fastest monthly growth of consumer goods' retail sales and the second highest monthly growth of industrial value-added output this year.

Despite the slowdown, experts claim that a growth rate of nearly 7 percent is quite remarkable compared to both developed and other developing countries, considering the sluggish global economic recovery. Moreover, good omens including efficient job creation, structural transformation and the emergence of new industries bode well for the nation's economic prospects.

To further promote economic restructuring and cement stable growth, the People's Bank of China, the central bank, reduced the reserve requirement ratio four times and cut the interest rates five times.

In November, President Xi Jinping proposed that China should reform and strengthen the structure of its supply front, in order to increase the quality and efficiency of the supply system and provide a greater growth impetus for sustainable economic development.

IMF Managing Director Christine Lagarde is interviewed by reporters in Washington, D.C. on November 30, after announcing the decision to include the Chinese yuan into the Special Drawing Rights basket (XINHUA)

Yuan's SDR Inclusion 

The Chinese yuan was added as the fifth currency to the International Monetary Fund's Special Drawing Rights (SDR) basket on November 30, marking a historic moment in China's journey toward globalizing its currency. The inclusion will go into effect on October 1, 2016.

The yuan has passed multiple milestones over the past few years. It is now the world's fourth most-used currency for payments, surpassing the Japanese yen.

To date, the central bank has signed currency swap agreements worth a total of 3.3 trillion yuan ($510 billion) with 33 overseas monetary authorities. Offshore yuan clearing and settlement services have been offered in over 20 countries and regions across the world.

To push it onto the global stage, the central bank is easing its control of the yuan by allowing the currency's value to be determined to a greater extent by the market. In August, China changed its central parity system to better reflect market developments in the exchange rate of the Chinese yuan against the U.S. dollar. In October, the central bank moved a step toward full interest rate liberalization by removing the 50-percent upper-bound for deposit rates. This, in principle, gives banks the freedom to set their own deposit rates.

Chinese commercial drone maker DJI’s staff member introduces its Phantom 3 drone to clients in Shenzhen, south China’s Guangdong Province, on November 22 (XINHUA)

New Growth Drivers 

China identified three new growth drivers in 2015--the upgrade of its manufacturing industries, mass entrepreneurship and innovation, as well as the Internet Plus strategy.

In May, the State Council released the Made in China 2025 plan, which aims to lift China from its current position as a manufacturing powerhouse to a world superpower in terms of its manufacturing industry. The plan calls for greener, more intelligent manufacturing while also focusing on quality and integration to the Internet.

Throughout the year, a torrent of innovation and entrepreneurship has swept China and become a new engine for economic growth. The Chinese Government has been making strenuous efforts to give more liberty to entrepreneurs and ensure that the spirit of innovation can filter into the fabric of society. To this end, Premier Li visited many inventors and incubators this year. The State Council has also released new supportive measures involving tax breaks, fundraising support and administrative procedures reforms in order to support startups.

The Internet economy ballooned in China during 2015 with the value of e-commerce transactions reaching record highs. E-commerce giant Alibaba broke its own record this year, recording $14.3 billion in sales on Singles Day, an online shopping festival that falls on November 11 each year--China's equivalent of Cyber Monday in the United States.

The Internet sector has also witnessed quicker integration of the Internet and traditional industries, including mergers and acquisitions between some companies. In February, for example, Didi Dache and Kuaidi Dache--two leading taxi hailing companies--merged in a share swap worth $6 billion. In October, the top two group deals sites Meituan.com and Dianping.com also merged. Later that month, online travel service provider Qunar.com partnered with its archrival Ctrip.com in a stake-swap agreement.

In August, Alibaba teamed up with leading electronics retailer Suning in an attempt to build an all-around online-to-offline system encompassing e-commerce, logistics, after-sales services, marketing and big data.

Three Internet giants--Baidu, Alibaba and Tecent--have also teamed up with shopping malls, supermarkets and convenience stores, in order to take advantage of the emerging mobile payment market.

Stock traders observe the trading screens at a local brokerage in Jiujiang, east China’s Jiangxi Province, on June 16 (XINHUA)

Stock Market Volatility 

China's stock market this year was a roller-coaster ride. The stock market staged a stunning surge from November 2014 to mid-June, when the Shanghai Composite Index (SCI) soared from just under 3,000 points to its peak of 5,166 points on June 12. After that, the stock market witnessed its worst three-week loss since 1992, when then SCI tumbled by nearly 30 percent for three weeks from June 15 to July 3. The dramatic fall wiped out $2.36 trillion during those three weeks--more than 10 times the GDP of Greece in 2014.

Wild price swings in China's stock market triggered sell-offs in some overseas markets, prompting widespread concerns. Analysts said that poisonous assets--stocks with extremely high valuations--and high leveraging are the main reasons for the sudden market slump.

To prevent further price slides that could lead to further risks, Chinese authorities did everything they could to rescue the market, even cutting transaction fees, suspending initial public offerings (IPOs) and urging state-owned enterprises to buy more stocks.

To curb abnormal price swings in the future, China announced that it will implement a circuit-breaker mechanism in its stock markets from January 1, 2016. This system will temporarily suspend trading in case of huge rises or drops in the stock market. The new mechanism will cover the trading of all stocks, including convertible bonds, stock options and futures contracts.

In the long run, China will reform its stock market by changing from the current approval-based IPO mechanism to a registration-based one, with the legal procedure for the reforms being expected to be completed as early as the end of this year.

China’s finance minister Lou Jiwei (center) signs the Asian Infrastructure Investment Bank agreement in Beijing on June 29 (XINHUA)

Boosting Outbound Investment  

The Belt and Road Initiative and the Asian Infrastructure Investment Bank (AIIB) are expected to greatly facilitate China's outbound infrastructure investment.

On March 28, the National Development and Reform Commission, the Ministry of Foreign Affairs and the Ministry of Commerce jointly issued a long-expected document titled Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road. It's estimated that in the next few years, more than 1 trillion yuan ($160 billion) in Chinese investments will be made among the countries lining the proposed trade routes.

On June 29, the agreement for the China-initiated AIIB was signed in Beijing. The signing was attended by financial ministers and authorized representatives from 57 founding member states at the ceremony, marking significant progress toward the bank's formal launch and operation.

Containers filled with beef cattle from Australia arrive in southwest China’s Chongqing on October 21, marking the first cattle import from Australia since the signing of the China-Australia free trade agreement (XINHUA)

A New Era of Trade Ties 

In June, China signed Free Trade Agreements (FTAs) with Australia and South Korea.

On November 9, the Senate of the Australian Federal Parliament passed the China-Australian FTA, after the Australian House of Representatives approved it in October. On November 30, South Korea's parliament ratified its FTA with China during their plenary session.

Both FTAs came into effect on December 20.

China is carefully knitting a global free trade network by inking bilateral free trade agreements with as many countries and regions as possible. This could offset any impact that the United States-led Trans-Pacific Partnership trade agreement--signed by 12 pacific-rim countries--could have on China, given that it is not part of the deal.

According to the Ministry of Commerce, China is now the largest trading partner of over 120 countries in the world. The country has signed 14 FTAs with 22 countries and regions--evidence that the Chinese economy has deeply integrated into the world economic system.

The Qianhai & Shekou area of the China (Guangdong) Pilot Free Trade Zone (XINHUA)

Negative List Goes Nationwide  

In April, three more experimental free trade zones (FTZs) were officially launched. Meanwhile, a shortened 2015 version of the negative list was implemented in all FTZs to manage foreign investment.

Later this year, the negative list management approach was extended to cover domestic businesses, too.

Following the success of the China (Shanghai) Pilot Free Trade Zone, which was established in September 2013, the central authorities in March approved a plan for experimental FTZs in Tianjin, a northern municipality adjacent to Beijing, south China's Guangdong Province and southeast China's Fujian Province.

The Shanghai FTZ was the first to adopt the negative list approach in order to manage foreign investment in 2013. The approach allowed foreign investors access to China under the same regulations for new investments as domestic companies, just as long as the business was not on the negative list. The 2015 version of the negative list, effective from May and applied to the four FTZs, detailed a total of 122 items, 17 less than the list that was applied in 2014 for Shanghai's FTZ.

On October 19, authorities said that China will pilot a similar negative list approach in some regions from December 1, 2015 to December 31, 2017. The list will identify sectors and businesses that are off-limits to investment or restricted. The aim is to explore a system that could be replicated nationwide in 2018 as part of efforts to streamline government administration and give the market more freedom.

An assembly line for state-owned bullet trains maker CNR in Changchun, northeast China's Jilin Province. CNR has merged with another train maker CSR to form CRRC Corp. Ltd. (XINHUA)

SOE Reform Plan  

On September 13, China unveiled long-awaited details of how it would overhaul its state-owned enterprises (SOEs), the latest move to invigorate the country's torpid state-owned sector. The government hopes that by changing the system, it can shape a more pragmatic management system and help nurture more competitive SOEs.

According to the guidelines released by the State-Owned Assets Supervision and Administration Commission of the State Council, China will modernize SOEs, enhance state asset management, promote mixed ownership and prevent the erosion of state assets. In doing this, the government hopes to improve the competence of SOEs and turn them into fully independent market entities.

Decisive results in key areas of the SOE reform are expected by 2020, when SOEs are expected to be more robust and influential and have greater ability to prevent and control risks, read the guidelines. The government should have nurtured a large number of state-owned backbone enterprises that are innovative and can challenge international rivals by that time.

The revamping of SOEs that are lagging has become one of China's most pressing needs amid a battle against downward pressure.

Residential housing projects in Jinshui District of Zhengzhou, central China's Henan Province (XINHUA)

Destocking the Housing Market 

The recovery of China's real estate sector has slowed mainly due to a continued oversupply of homes. The number of unsold homes in China hit a record 686.3 million square meters at the end of October, up 17.8 percent from a year earlier, according to the National Bureau of Statistics.

To prevent the lackluster property market from pulling down the economy, central authorities have stepped up to the plate over the past year by loosening home-related policies. On March 30, the central bank also cut the minimum down payment for second homes from 60 percent down to 40 percent. Other measures include the lifting of home-purchasing curbs and loosening taxation rules.

As a result of those support policies, property sales in top-tier cities and some second-tier ones have recovered. However, the slump has continued in others--especially third-tier cities where a previous market boom had led to serious oversupply.

In a meeting of the Central Leading Group for Financial and Economic Affairs on November 10, President Xi said that destocking the property market and promoting its continual development was a key task for the government.

The Xuzhuang section of the Beijing-Tianjin Expressway (CFP)

Regional Integration

An integrated development plan for Beijing and its neighbors--Hebei Province and Tianjin--was approved by the Political Bureau of the Communist Party of China Central Committee on April 30.

The planned area encompasses Beijing, Tianjin and part of Hebei Province, a cluster inhabited by over 100 million people--three times as many as that of the Tokyo Megalopolis. The area boasts a combined GDP of over 6 trillion yuan ($980 billion) and covers an area of 216,000 square km.

According to the plan, Beijing will develop into China's political, cultural, technological innovation and international exchange center.

Tianjin will become a center for manufacturing, research and development, a core area for international shipping, and a demonstration site for financial innovation and reform.

Hebei is to become a base for logistics, a pilot site for industrial transformation and upgrading, and a demonstration area for urbanization and urban-rural development, as well as a support pillar for the region's ecology.