1. Review of Macroeconomic Performance in the First Half of 2012

In the first half of 2012, the quarterly growth rate of China’s GDP continued to decline compared to the same period of last year. The cumulative growth rate of GDP for the first half was 7.8 %, which is the lowest level since the first quarter of 2010. From the long term perspective, the slowdown of economic growth is the outcome of global economy rebalancing. It also is associated with the declining of China’s potential economic growth rate, after China ended a development stage with two-digit growth rate over the past 30 years and stepped into a new development stage at a slight low growth rate as a middle income country. From the short term perspective, it was partly due to economic recession in the euro area. It also resulted from excess production capacity, structural imbalance in manufacturing industry caused by rapid domestic investment expansion in the past few years, and the new real estate market regulations. The declining economic growth in China, together with uncertainty of the EU and the US economy, has triggered concerns about the future economic outlook. Thus, it is highly important that China adopts proper measure to stabilize economic growth and create conditions for further social and economic reforms and transformation of economic development pattern (Fig. 1.1).