While few economic measurements capture China;s economy, some coming trends are undeniable

Measuring China's change is hard. There are few indicators that readily correlate with business overall. Yes, we know that cities' residential housing prices have been on the decline and there is less demand for energy and steel. But how much do they affect GDP and employment? There isn't a fixed formula.

And yes, we know that while manufacturing activities remain weak, suggesting a continuing slowdown in industrial growth, the economy is showing some resilience outside the factory sector - given that the official nonmanufacturing purchasing managers' index rose to 53.9 in November from 53.8 in October, while the HSBC China services PMI rose to 53.0 from 52.9. But how can people quantify that as resilience? And to what extent can the growth of services offset the slowdown in industry? People don't have interpretive clues.

In overall terms, despite all the government plans and decrees, how much unwanted industrial capacity has China eliminated? And despite the premier's repeated call for supporting small enterprises, how much have they actually benefited? We have the data showing a major increase in newly registered companies. But what are they doing? How have they fared? There are no follow-up reports.

Sporadically, industry associations cite some numbers about the change in their own fields. But their numbers hardly add up with the numbers from other sources.

There has yet to be strong evidence that, more than one year after the Chinese leaders' decision on sweeping reform (containing as many as 60 points) in their Third Plenum, the expected change in the economic model of development is happening in many places. Data are scarce and unsystematic for anyone to fully appreciate the change. One doesn't even get many relevant investigative reports on the company level.

But knowing how much the country has done is important. It will be important to tell how far the country has traveled, if at all, in a transition from a largely export-led economy to one, as planned by its leaders, led by domestic consumption.

Ray Huang (1918-2000), a historian who specialized in the politics of the Ming Dynasty (1368-1644), once said ruling such a big and complex country like China was never a numerical business, or something that is based on hard data. Watching the country's economic transition now still takes a lot of hunch, or feelings based on experience.

A general feeling about the Chinese economy is that, now that the central bank just made one interest rate cut and is likely to make more in the next few months, the Chinese stock market may see a rare rally. It already has seen its start in the Shanghai Composite Index's rise from 2,000 to 2,800 in the last several weeks.

In a casual survey of the market's most-favored stocks, one can tell that the old-industry companies are losing their luster. Nor can many real estate developers, because of the huge number of unsold new houses, easily become attractive to investors.

More than ever before, companies see their share price rise because they have technologies of above-average standards that either make a splash in the consumer market, or are procured by large, government-led infrastructure projects.

Some international technology research companies are forecasting that in 2015, Chinese companies dogged by slowing growth and rising labor costs are likely to use information technology to an unprecedented degree.

International Data Corporation estimates that nearly 500 million smartphones will be sold in China in 2015, three times the number in the United States and one-third of global sales. In the same year, more than 680 million Chinese people will be online, or 2.5 times the US number.

Who will provide all the hardware - that is, so many phones - is one matter. How they will be used is another. A smartphone nation will naturally give rise to a smartphone economy, and this will help many services not easily accessed by citizens now move online.

The change may be a long-term thing. But it goes without question that it will advance in a big way in 2015, and impact many industries.

No tourism company can exist without active online customer service. The boom in e-commerce has already forced some major department stores to close their outlets. Online loan businesses are rapidly eroding the role of semi-bureaucratic, state-owned banks. Education and health services must learn to compete online.

The economy is becoming more diverse in due course. Although diversity was not among the 60 points of last year's reform program, it definitely helps create a more competitive society.

The author is editor-at-large of China Daily. Contact the writer at edzhang@chinadaily.com.cn

(China Daily European Weekly 12/05/2014 page13)