The value added of major industrial enterprises, an important economic indicator, expanded 6.9 percent year on year in the first half, 0.1 percentage point higher than that of the first quarter. The service sector has continued its growth, with the index of services production increasing 8.3 percent year on year. The purchasing managers' index rose to 51.7 in June, up from 51.2 in May, marking the 11th consecutive month of expansion.

A twofold trend

The reasons behind the current economic situation are twofold. First, China's export growth - which dropped significantly during the global economic meltdown - is not out of the woods yet.

China's exports registered a 15-percent growth year on year in the first six months of 2017, a sign that the economy is holding up better than expected.

Yet, we should not be overly optimistic about China's export performance in 2017 on the whole given uncertainties in other major economies. Overall, there is a high likelihood that China will be able to end negative growth in exports and that the economy will continue to stabilize.

Second, China's urbanization continues to maintain its strong momentum despite some difficulties. For a long time, the lack of popularity of many small and medium-sized cities - a major bottleneck for their further development - has restricted their urbanization process, the improvement of people's standard of living, the upgrading of the country's consumption structure and the expansion of market demand.

As a result, real estate enterprises involved in urban development have had to face many problems, such as difficulty in selling houses in small and medium-sized cities.

By 2016, the share of China's residential population living in urban areas had risen to 57.35 percent. Meanwhile, the proportion of urban household registration holders accounted for 41.2 percent of the population. Compared with the residential population, the size of China's "floating population" is huge, giving strong momentum to urbanization.

In the process of pushing for a new type of urbanization, China will speed up its infrastructure development through urban agglomerations and public service sharing.

The promotion of a new type of urbanization is expected to improve the real estate development environment, and provide continuous support for demand. As a result of improved popularity, the housing market in a number of second-tier cities will benefit from stronger demand. These urban growth poles, in turn, are expected to play a strong radiating role in boosting the development of surrounding third and fourth-tier cities.

In this context, real estate investment has staged a rebound since last year. Investment in real estate development grew 6.9 percent year on year in 2016, which is 5.9 percentage points faster than a year earlier. It grew 8.5 percent in the first half of this year.

Moreover, infrastructure investment is expected to maintain relatively strong growth. The number of construction projects have been on the rise as China promotes new-type urbanization and the Belt and Road Initiative. Besides, some local governments have gained relevant experience in issuing bonds and using public-private partnerships for fundraising.

As a result, infrastructure investment has shifted from a model driven by high growth targets, to a model driven by an increase in construction projects and improved funding.

Rising domestic consumption

It should also be noted that domestic consumption continued to maintain a robust growth rate of about 10 percent.

Since 2012, the Chinese Government has taken targeted measures to tackle the issues of unemployment and poverty, despite the downward economic pressure. Job creation remained solid over the first six months of the year, with the creation of 7.17 million new urban jobs, almost on a par with the same period last year. Per-capita disposable income grew by 7.3 percent year on year in real terms after taking into consideration the effects of inflation, outpacing the GDP growth rate of 6.9 percent over the same period.

Supported by this steady growth in income, residental living standards continued to improve, which is evident from more active consumption activities such as online shopping, tourism, and catering. Consumption is expected to continue to maintain its steady growth, which plays a supporting role in stabilizing economic growth.

It should also be noted that scientific and technological research and development (R&D) activities in industrial enterprises have increased significantly, with a focus on raising growth quality and efficiency. For instance, China's electrolytic aluminum industry is now leading the world in terms of energy efficiency. An increasing number of industrial enterprises, supported by scientific and technological progress, have improved their competitiveness and started exploring both domestic and international markets.

This trend has contributed to sustained and rapid growth of the country's R&D spending. From January to June, investment in hi-tech manufacturing industry increased by 21.5 percent, 12.9 percentage points faster than the total investment. In this period, the value added of hi-tech industry grew by 13.1 percent year on year, 6.2 percentage points faster than that of major industrial enterprises as a whole.

Overall, the big picture is that the market demand at home and abroad shows a stable recovery. The business climate has improved significantly this year, supported by innovation and restructuring. From January to May, total profit of major industrial enterprises achieved a year-on-year growth of 22.7 percent.

After many years of effort, China has overcome the influence of the global financial crisis and its urbanization problems, and is on the path toward achieving medium-to-high economic growth. Its economic growth is expected to be generally stable in 2017, with performance similar to or better than that of 2016.

(The author is a research fellow with Development Research Center of the State Council of China).