China will continue to experience an economic slowdown, while major challenges have still to be met, forecasters said on Jan 19.

However, most agree that a major crash from a hard landing appears unlikely.

The comments were made after the National Bureau of Statistics reported that economic growth fell to a 25-year low of 6.9 percent in 2015, down from 7.3 percent the previous year.

GDP grew by 6.8 percent in the fourth quarter, down from 6.9 percent in the third and 7 percent in the first two quarters.

Responding to the figures, Yicai, the website of China Business News, said China is entering the "6 percent era".

The statistics bureau said that in 2015 the service sector contributed an unprecedented 50.5 percent of GDP growth, compared with 48.1 percent in 2014. In contrast, the manufacturing sector, the economy's traditional growth leader, contributed 40.5 percent, down from 47.1 percent a year earlier.

Wang Bao'an, director of the statistics bureau, says the change indicates the economy is becoming more balanced.

Exports and industry, particularly heavy industry, are no longer the main engines driving growth, the bureau said. Government-led investment in public infrastructure, the manufacture of more high-value-added electronic systems, and e-commerce are the new leaders of the economy.

Zhu Jianfang, chief economist at CITIC Securities, says the economy will probably face even heavier downward pressure this year as a result of the closure of uncompetitive and polluting industrial plants.

"For the government, managing a soft landing without triggering a rise in unemployment or financial distress, and fostering new sources of growth through structural reform and countercyclical economic policies are challenging tasks," adds Zhu Haibin, chief China economist at JP Morgan Chase & Co.

On Jan 5, the Chinese Academy of Sciences forecast 6.5 percent GDP growth in the first half of this year. It said that growth could rebound moderately to 6.8 percent in the second half, as industrial overcapacity will remain to slow growth in real estate investment.

Economists expect more catalysts for sustainable growth, including new urbanization driven by land reform, household registration reform and improved public services, technological innovation and industrial upgrading and economic openness.

All these have been highlighted by the top leadership as a new type of reform, different to the traditional stimulus on the demand side - consumption, investment and exports - or supply-side reform.

Other major economic indicators released by the statistics bureau included industrial output growth, which dropped to 6.1 percent last year from 8.3 percent in 2014, reaching the lowest level since the global financial crisis.

Fixed-asset investment growth fell to 10 percent from 15.7 percent in 2014, and retail sales dropped to 10.7 percent from 12 percent, the bureau said.

Tom Rafferty, lead China analyst at the Economist Intelligence Unit, suggests that the economy "pivot back" to its traditional growth drivers this year to sustain expansion. "A warmer property market will provide some support, but the government also needs to accelerate efforts to restructure industry and tackle overcapacity," he says.

chenjia1@chinadaily.com.cn

( China Daily European Weekly 01/22/2016 page3)