The 13th Five-Year Plan (2016-20) period is crucial in China's modernization process, as is the year 2020 in terms of readjusting the country's economic structure and transforming its growth pattern. At the same time, 2020 also serves as the deadline for China's completion of its goal to build a moderately prosperous society. The achievement of all development goals during the 13th Five- Year Plan period will be paramount if China is to foster fair and sustainable economic growth for the foreseeable future.

China's economic transformation is at a pivotal juncture. On one hand, a slow economic shift would intensify downward pressures. China registered a GDP growth of 6.9 percent in 2015--but even though the economy is stable--growth suppression has been increasing. If the pace of the economic transformation were to decelerate, it would not only intensify negative effects in the short term, but also raise concerns on China's mid- and long-term economic prospects.

On the other hand, investment-driven growth has reached the end of its line. China is now facing severe challenges with regards to cutting excessive industrial capacity, destocking and de-leveraging. The formation of excessive production capacity, unsold homes and high leverages were inevitable outcomes of the investment-driven era, and also highlights the unsustainable nature of the investment-led growth pattern.

Whether or not cutting excessive industrial capacity, destocking and de-leveraging will be effective depends on the success of the planned breakthroughs in readjusting the industrial structure. During the 13th Five-Year Plan period we've just entered, and especially throughout the coming two years, if the government leads China toward the appropriate path, the downward pressures of economic growth in the short term will be alleviated. If this is the case, the country would unleash its significant potential for economic growth in the middle and long term. Otherwise, the country might lose the initiative in terms of economic growth, thereby arousing systemic economic and social risks.

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