While China’s National Bureau of Statistics’ (NBS) reporting on GDP growth grates have been called into question by international observers, there is acknowledgement that the structure of China’s economy is changing. The real test of the reliability of official reporting, therefore, will come when NBS issues its Q3 headline GDP figure.

China’s economy has shifted to a slow gear, having a bigger impact on those resource-exporting countries which highly depend on China’s market, but having no remarkable impact on European and the US economic growth. In particular, China’s slow economy is not the “culprit” of the recent US stock market slump, which was caused by the American market’s own problems.

The IMF holds a cautiously optimistic view about the prospects of the Chinese economy, recognizing that the important reason for a slowdown in China’s economy is the change in its development strategy. The services industry is rising, R&D is expanding slowly, and the financial system is modernizing. These changes take time and patience: If China chooses to slow down a little bit, it will be easier for the country to succeed and achieve the long-term goals it has anticipated.

The downturn of global financial and foreign exchange markets, is causing concerns in the Americas. A Chinese trade and investment focus on the “Pacific Pumas” would be a prudent strategy and help reduce tensions and suspicions between the U.S. and China in the region.

Enjoying great potential and elasticity, the Chinese economy has enough leeway to cope with various changes and challenges, and its general trend of steady growth -- pushing the global economy towards recovery -- remains unchanged.

The rapidly swelling local government debt in China over the past few years are seen by many as a trigger to a credit bubble, or even a full-blown financial crisis. Budget reform, the first critical reform among over 330 reform proposals of the Xi administration, has kicked off, laying the foundation for a more balanced and transparent government budget and financing structure. Yifan Hu outlines the areas needed for both short and long term structural changes.

Despite China’s remarkable growth, the property market still faces the challenges of consolidation, industrial overcapacity, financial risk, deflationary risk, and structural employment issues. In response the government will adjust to the economy’s “new normal” of slower growth, move toward an innovation based economy with more public goods and services, and pursue a proactive fiscal economy and a prudent monetary policy.

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.

“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.