China not sheepish about reforms in the Year of the Sheep

The core of China's reform package is to give the market a decisive role in allocating economic resources in order to increase efficiency and social fairness.

It's true that recent data confirm the picture of an ongoing slowdown, which, to a large extent, has been self-inflicted as China strives to ease its real estate bubble and industrial overcapacity, the main drags on growth.

Although a rapid recovery is unlikely, 2015 will not be another year of pain for the Chinese economy. Growth may drop further, but it will not be a big concern as the country has an arsenal of policy options at its disposal to counter the slowdown, including lowering interest rates and the reserve requirement ratio for banks.

As President Xi Jinping put it in his New Year's speech, "there is no turning back" for China's reform drive.

Despite the progress China has made, a lack of more aggressive reforms in certain sectors is distressing, such as reforms in its state-owned enterprises. These reforms, if better implemented, will unleash new growth in 2015.