Chu said the meeting hinted at reforms in taxation and some other areas, and cutting down on government bureaucracy would likely come in the second half.

Despite mounting concerns from the market, the Political Bureau said they believe the country has entered a period of steady and healthy economic development, noting that the economy will maintain steady growth in the latter half of the year.

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.

Email us at: lanxinzhen@bjreview.com

Top 10 Tasks

- Continuing with a proactive fiscal and prudent monetary policy and directing financial support to the real economy;

- Expanding domestic consumption, keeping reasonable investment growth, promoting urbanization, and maintaining stable and healthy development of the real estate market;

- Maintaining a steady growth of agriculture output;

- Further increasing financial services for small and micro businesses;

- Accelerating industrial restructuring and adjustment, cultivating and developing strategic emerging industries, promoting information technology, environmental protection, new energy and the service sector;

- Implementing regional development strategies;

- Stabilizing foreign trade by expanding export channels and effectively coping with trade frictions;

- Further cutting down on administrative bureaucracy and delegating more power to lower-level governments, accelerating fiscal, taxation and financial reforms, and pushing forward reforms of natural resource pricing;

- Stabilizing commodity prices and mitigating the influence of rising prices on the day-to-day lives of the people;

- Improving people's livelihoods by offering more job opportunities, establishing an overall social insurance system that covers both rural and urban residents, and promoting the development of education, healthcare, culture and sports.

(Compiled by Beijing Review)