Entering the second quarter, under mild economic stimulus, some of China's leading economic indicators are showing positive trends, but downside risks remain—especially with the latest May data from the National Bureau of Statistics, which shows the national real estate market continuing to cool, with the number of cities seeing month-on-month price declines reaching half for the first time. The sluggish property market has led to relatively weak investment growth. How will the Chinese economy perform going forward?

"The Chinese economy will not have a hard landing, and the property market cannot collapse." Yesterday, the Peking University HSBC Business School Economic Forum was held in Guangzhou. Fan Gang, president of the China Society for Economic Reform and director of the National Economic Research Institute, analyzed the latest economic situation at the forum, saying that marked by the purchase restrictions introduced in 2010 and the cleanup of local government financing vehicles, China was the first country in the world to exit stimulus policies after the international financial crisis, preventing the real estate bubble and overheating of local financing from spreading further. At present, a turning point in the property market has already appeared, but because overheating was curbed early, this will not be a deep adjustment. After two to three years of stabilizing housing prices and steady growth in per capita income, in regions with population inflows, the supply-demand relationship in the real estate market will eventually adjust and ultimately move toward equilibrium; however, in regions with population outflows, the supply-demand imbalance in the real estate market may be very difficult to correct.

"A small bubble leads to a small adjustment; a soft landing is still a landing. Some enterprises must accept the fact of exit, and some production capacity must accept the fact of being eliminated." Fan Gang analyzed that overheating easily breeds crisis, and crisis is defined as excess production capacity, but given some of the policy measures China has adopted, a large-scale economic crisis will not break out because of problems such as overcapacity. The problems China's economy now faces—overcapacity, bank bad debts, shadow banking, and local debt—are precisely the result of two rounds of economic overheating over the past decade. These aftereffects of an overheated economy need to be adjusted through a "soft landing," digesting excess inventory and excess production capacity.

Fan Gang said that because the government still has substantial fiscal spending capacity this year, economic growth in 2014 can be maintained at around 7.5%, and the Chinese economy will stabilize at this level over the next two to three years.