Now that the economy is back on track and headed in the right direction, more attention should be paid to stabilizing and sustaining the recovery. The government should strike a balance between investment growth and consumption growth, between expanding domestic demand and motivating external demand, and between protecting growth and securing employment.

Looking ahead

China has gone through the first half stage of industrialization and urbanization. It is safe to say that the economy will grow at around 7 percent annually in the next decade.

However, it will not be easy to achieve this goal. We must adopt the following four strategies: first, expanding and upgrading domestic demand; second, modifying industrial structures featured in boosting the competitiveness of high-end products; third, advancing human resources quality by way of supporting employment, improving social security, and enhancing education; and fourth, combining energy conservation and technological innovation while reducing carbon emission.

In the wake of the 1998 Asian financial crisis, two new growth engines emerged: real estate and auto consumption. The prerequisites of their growing contribution are the housing system reform and China's entry into the World Trade Organization. The government should continue to make headway in reforming its policies to meet the new needs of industrial development.

Industries Keep Rebounding as Reflected by:

1. Raw material production, driven by strong fixed-asset investment, is accelerating. In July, metallurgical and non-ferrous metal industries grew 14 percent and 11.5 percent year on year, respectively. Crude steel output reached 50.68 million tons, recovering nearly 90 percent of its normal capacity.

2. Equipment manufacturing industry has shown robust growth thanks to investment and favorable government policies. In July, the industry rose 15.9 percent year on year, the third consecutive month for a double-digit growth.

3. Consumption is picking up when domestic demand rises. In the first seven months this year, the industrial added value of consumer goods rose 9.5 percent year on year, with that in July hitting 11.4 percent, the third double-digit growth this year.

4. The consumption-oriented favorable state policies, export stabilization policies and 3G (the third generation) network construction prevented the electronic and information industry from hitting rock bottom. In the first seven months, a total of 13.88 million units of home appliances were sold in rural areas with a total value of 25.1 billion yuan ($3.66 billion).

(Source: China Industrial Economic Operation 2009 Summer Report by the Institute of Industrial Economics of the Chinese Academy of Social Sciences)