China’s macro challenge: Stay problem-oriented and target-oriented, considerably alleviate the financing difficulty of the private enterprises, reduce excess capacity, foster a driving force for a new growth and stimulate private investment – all while speeding up supply-side structural reform.

China’s economy will constantly have to overcome contradictions and problems, as it explores new avenues for economic growth in a period of recurring volatility. Current indicators are positive, but as the economy steadies itself for the long term, it will fluctuate and experience reverses during the short term.

The downward pressure on GDP growth has eased a bit and the economy has rebounded somewhat, mainly because of government investment in infrastructure and the real estate speculation despite a lack of domestic residential demand. Therefore, the state of China’s economy remains a mixed picture.

The years ahead offer parallel tracks for growth for both countries, and an “early harvest” for US enterprises, if opportunities are seized in areas such as innovation, Internet plus, reducing capacity, expanding the service sector – especially in healthcare -- and developing emerging industries.

Despite slower growth and two parallel spirals weighing down the Chinese economy, its economic fundamentals are not that bad thanks to its high saving rate and relatively strong fiscal position. If the government can implement an appropriate policy mix and successfully promote creation and innovation, the economy can rebound and return to a slower but still inspiring growth path.

China’s stock market turmoil has caused pundits to conclude that China’s economy won’t face a soft landing. Yet the macroeconomic fundamentals of the Chinese economy continue to be auspicious.

China’s transition to a more innovative, consumer-driven economy is well underway. While volatility is likely to persist, smart use of state resources, together with sure-footed reforms and increased transparency in decision-making should help China achieve moderate yet sustainable long-term growth.

There is no need to worry about the slide in China’s GDP growth and its turbulent financial markets, because the market economy has taken root across the country — a market of 1.4 billion consumers. Pressures from regional setbacks can be absorbed by the greater national economy, as long as the government pursues its transition from a real estate-driven economy.

As the labor supply declines and labor cost increases, China must strengthen the supply front to really create new supply and efficiency dividends through reform. Reform on the supply front requires the improvement of capital-formation efficiency for the next five years.

China certainly experienced a turbulent summer, owing to three factors: economic weakness, financial panic, and the policy response to these problems. But none on its own would have threatened the world economy. The assumption that China is now the global economy’s weakest link is highly suspect.