Supply-side reform making progress: professor

Although China's GDP growth in the second quarter this year is better than expected, the industrial economy is still slowing down, says Gan Jie, a professor of finance at the Cheung Kong Graduate School of Business (CKGSB).

Gan, also the director at the CKGSB's Center on Finance and Economy Growth, released a report into China's industrial economy during the second quarter of 2016, in Beijing on Wednesday.

She says although the GDP growth in the second quarter, which boasts a year-on-year growth of 6.7 percent, is better than expected, China's industrial economy is still slowing down.

"In the industries, the investment of enterprises is quite weak, only nine percent of companies made fixed asset investment, and only two percent made expansion investment," she says.

Gan says supply-side reform, which was initiated last year to tackle industrial overcapacity, has now made some progress, but overcapacity remains a big challenge.

The report shows that in the second quarter, about 2.6 percent of companies had stopped production. Reducing production and job cuts are common now in the companies that have overcapacity problems. Nonetheless, about 81 percent of companies' biggest concerns relates to a lack of orders from clients.

Moreover, due to weak investment and overcapacity, companies don't have much need for financing, so financing is not the bottleneck for the development of industries.

However, Gan says the Chinese economy will still have many new growth drivers, such as the development of emerging industries, State-owned enterprise reform and urbanization.

"In a long run, we keep a positive attitude towards China's economy," she said.