The renminbi has appreciated sharply over the past several years, exports are sagging, and the risk of deflation is growing. Under these circumstances, many suggest that a reversal in Chinese currency policy to weaken the renminbi is the most logical course. That would be a serious mistake.

European quantitative easing policy lead to the depreciation of the RMB exchange rate, but this depreciation is being carefully and intentionally observed by China’s central bank to observe the actual impact on the Chinese economy. A more flexible and internationalized RMB will be better to guard against depreciation.

China’s “new normal” economic development is necessary to achieve more valuable GDP growth at a more reasonable speed and sustainability. Key components of these reforms will be decreased growth, higher-level manufacturing, narrowing of rural and urban wealth, capital exports, a consumer middle-class, and new small businesses.

China’s economic slowdown fueled by a real estate bubble, excessive debt, and manufacturing overcapacity could benefit from a change of structure. China’s service sector is now a greater percent of its economy than manufacturing and construction sectors, and with some additional government spending on social services, the economy could see long-term growth.

Falling oil prices present challenges for the competitiveness of China’s own oil and gas sectors, and while providing short-term benefits for production, poses additional deflationary risks. However, there are opportunities for Beijing to support oil companies in acquisitions, and further its own reserves.

China’s central bank will maintain a neutral stance in 2015, in order to stabilize the stock market and provide support to the economy, writes Yi Xianrong.

“New normal” has become a buzzword in China since the second half of 2014. At the APEC CEO Summit on November 10, 2014, President Xi characterized China’s “new normal” as slower growth, economic restructuring and innovation-driven growth.

Over the past two decades, China’s growth paradigm characterized by investment and driven by exports has run out of steam. A major feature of China’s current economy is overcapacity, especially in the real estate sector. An increase in domestic consumption and infrastructure investment will help continue growth, but the biggest challenge facing China in 2015 is the high corporate debt ratio.

Different opinions have been observed as the figure of GDP for the second quarter in China —7.6% had been released. Optimists see the glass is half full, belie