A view of Shanghai skyline Photo: CFP

The year 2015 saw the Chinese economy slide to its slowest pace in a quarter of a century as the economy shifted gears toward more sustainable growth.

This weaker-than-usual performance created an overall tense atmosphere. Yet, in the eyes of many, China managed surprisingly well considering the situation.

The year was very important psychologically speaking as it marked the last year of China's 12th Five-Year Plan (2011-15) and the midway point on the path toward reaching the nation's goal of doubling 2010 GDP and per capita income by 2020.

President Xi Jinping has said that China must achieve annual average growth of no less than 6.5 percent over the next five years to realize this target.

A difficult year



Faced with a difficult global and domestic economic situation, the year saw the country's GDP growth fall to 6.9 percent during the third quarter, a 25-year low.

The overall economic slowdown was felt in many sectors, from losses in the heavy industries to weak exports and woes in the property sector.

The investment growth rate continued to decline, shrinking from 14 percent at the beginning of this year to less than 2 percent in November.

The steel, cement, coal and shipping industries were severely hurt by a supply glut. For instance, during the first 10 months of 2015, the nation's large- and medium-sized coal companies reported a year-on-year drop in profit of 62 percent, while State-owned coal firms reported losses of 22.3 billion yuan ($3.44 billion), a stark contrast to 2014's 30 billion yuan in profit.

The property sector also faced difficulties, with housing inventory hitting 696.37 million square meters in November, up 10.04 million square meters from October - a record high according to figures released by the National Bureau of Statistics in December.

"The problems in the industries, the property, metal and mining sectors will need many years to recover. And there is an overwhelming debt issue," Michael Every, head of financial markets research Asia-Pacific at Rabobank, told the Global Times.

The rapid rise in government and corporate debt since 2010 only added to these woes. 

Overcapacity has caused some companies to announce plans to cut production. In December, 10 copper firms announced that they will cut 350,000 tons - approximately 9 percent of 2015's output - in 2016.

In the steel sector, despite a 50-million-ton reduction in production capacity over the year, a further 120-160 million tons are expected to be cut next year to help maintain sound industry development, CCTV reported on December 13.

"A lot of the old economy in China just needs to close. And then people need to find new jobs in new industries," Every said.

Despite some worrying signs, overall economic stability was one defining feature for the year.

Xu Hongcai, director of the Economic Research Department at the China Center for International Economic Exchanges, described the overall stability in major economic indicators as a "hard-won achievement."

"Generally speaking, the economy will meet the targets set for the year, this includes specific growth targets such as GDP growth, employment rates and balance of payments. Given the overall situation, these achievements have not come easily," Xu said.

Out with the old, in with the new



The year 2015 saw the old economy giving way to the new, both in terms of investment and capacity.

In the first 11 months of the year, China's export volume stood at $2.05 trillion, down 3 percent, while import volume nose-dived by 15.1 percent to $1.5 trillion, according to data from the General Administration of Customs.

The figure is gloomy, yet a closer look shows that private companies actually saw a gain of 1.2 percent during the period. Compare that with the 5.7 percent slowdown experienced by State-owned enterprises (SOEs).

Shrinking external demand, low value-added manufacturing, rising labor and environmental costs were behind the export slowdown, Xu said.

In a surprise move, in August the People's Bank of China, the country's central bank, devalued the yuan by 2 percent with its introduction of a market-based mechanism to determine the daily opening rate. Some read the measure as a way to help boost exports.

While exports saw a downturn, some sectors, such as e-commerce and package delivery industries, continued to grow.

In the first three quarters of 2015, the services sector posted 8.4 percent growth, accounting for 51.4 percent of GDP, according to the National Development and Reform Commission (NDRC).

"I saw more competition from within the industry in 2015, but I also felt recruitment has been easier compared with 2014. Maybe it's because many factories have closed down and people came to me looking for jobs," said Dou Liguo, a delivery man turned manager who runs a station for an express delivery firm in Beijing. Recently buying a luxury SUV, the year has been good to him.

Dou's story underlines the continuous growth of China's package delivery industry. From January to November, express delivery companies in China handled 18.25 billion parcels, up 48.1 percent year-on-year, with income leaping 34.9 percent to 245.6 billion yuan, data from the State Post Bureau shows.

The year was also a major one when it came to reform, with the government publishing guidelines for SOE reform and the addition of three pilot free trade zones.

Part of the solution to the country's persistent overcapacity, mergers between large SOEs was also a major trend for 2015. This included the mergers of two of China's largest nuclear power firms, the top two rolling-stock producers, two metal companies and two State shipping firms.

The year also saw the growth of public-private partnership (PPP) projects, which are seen as an effective way to ease financing difficulties with public projects such as water plants and garbage disposal centers. By December, the NDRC had built a PPP project database including more than 2,100 projects costing a total of 3.5 trillion yuan.

Silver lining



Despite some slowdown, there were some bright spots in China's economic landscape. For instance, Gan Li, a professor with Southwestern University of Finance and Economics, pointed out that the wealth of Chinese families has not yet been affected by the slowdown.

"Chinese households' net value actually increased. Compared with 2013, Chinese family assets increased by 20 percent as the impact of the economic slowdown was offset by changes in family demographics," Gan, whose team conducts the China Household Finance Survey, told the Global Times.

These assets include stocks, wealth management products and financial products offered by Internet finance firms, Gan said, noting that family spending grew by 23 percent from 2013.

Remarkable progress has also been made at the national level.

China-initiated "One Belt, One Road" (B&R) initiative, which aims to restore the glory of the ancient Silk Road, became a subject of interest for dozens of countries and regions in 2015. Chinese investment in B&R countries and regions during the first 10 months of this year totaled $13.17 billion, up 36.7 percent from last year, according to the Ministry of Commerce.

"My moment of the year was when electricity generated by our solar plant was connected to the Pakistani grid," Hou Peng, a manager at TBEA Xinjiang SunOasis Co, told the Global Times.

Hou and his colleagues built a 100-megawatts solar park in Bahawalpur, the first solar plant in Pakistan, after working for 12 months in a seething desert. Hou's solar plant is just one of the many projects that are part of the China-Pakistan Economic Corridor, which is in turn a part of the B&R initiative.

And in December, the yuan was included in the International Monetary Fund Special Drawing Rights (SDR) basket as its fifth component currency. SDR is an international reserve asset whose value is based on a currency basket that currently includes the US dollar, the euro, the Japanese yen and the British pound.

"There hasn't been a currency from an emerging market in the SDR for decades, and in the long run it will make China truly international," Every said, noting the political significance of the inclusion.

Andrew Colquhoun, head of Asia-Pacific Sovereigns at Fitch Ratings, said the liberalization of deposit interest rates in October, and the decision of the IMF to make the yuan part of the SDR basket were two stand-out events of the year.

"Taken together, these reforms point to a future where capital is priced at a more rational and economic rate in the economy, and therefore can be allowed to flow more freely across the border," Colquhoun told the Global Times.

In summary, developments in 2015 suggest that the key issue for 2016 will be how to reconcile the dilemma that exists between apparently conflicting priorities for domestic and external financial stability, he noted.