Key growth targets well within reach

But investment is expected to stabilize, as the central government accelerated construction of affordable housing projects and a number of local governments lifted restrictions on property purchases.

Investment sentiment is likely to recover slightly in the second half, providing a stable foundation for economic growth.

With economic growth expected to stabilize in the second half, the government should refocus on reforms.

Economic growth and reforms are not contradictory. In fact, reforms can help boost long-term, sustainable development.

One recent example is the stable job market. Although economic growth slowed in the first half of the year, the labor market as a whole showed little effect. Newly created jobs amounted to about 7.3 million from January to June, slightly more than in the same period last year. That performance defied the economic slowdown trend and was bolstered by earlier reform policies such as tax exemptions for micro, small and medium-sized enterprises, simplified corporate registration and administration management, and a lower threshold for Internet sellers. This shows reforms can lead to long-term benefits and help buffer the impact of an economic slowdown. Thanks to the stable job market, this round of economic slowdown did not cause a panic. So, reforms must gather pace to ensure people can benefit even if the size of the economic pie grows less quickly.

The next step of reforms should focus on the financial, public and services sectors. Rate liberalization must be continued by widening the yuan trading band, accelerating the trial of certificates of deposit to pave the way for the scrapping of the deposit rate ceiling, and allowing private investors to set up banks.

In the public sector, mixed ownership reforms must be deepened to let state-owned companies exit non-strategic industries. Powerful, independent supervisory boards can be tested in state companies while private and foreign investors are given their say when they hold stakes in state companies.

The authors are Shanghai-based financial analysts. The views do not necessarily reflect those of China Daily.

China's H1 growth up 7.4%, showing economic resilience	Export growth picks up in June