As China entered “New Normal” from 2014，its economy has emerged a phenomenon，so called as “Three-Period Superimposition”，which is simultaneously dealing with the slowdown in economic growth，making difficult structural adjustments，and absorbing the effects of previous economic stimulus policies. Such “Three-Period Superimposition” leads to the decline in business profits，unstable debt of local government，growing overcapacity and the deflation of production under the economic slowdown background，as well as the rising high debt ratio resulted by policy incentives. The national debt of 2014 was up to 282% of GDP （McKinsey，2015），and this pressure has directly passed to 2015. Since the Chinese economy in the first half of 2015 is still on a slower path of growth，the key for this stage is to promote economic restructuring by keeping steady growth，accelerating reforms，dealing with deflation challenges，and enhancing contribution of innovation to economic growth.

In 2015，China is actively laying foundation for the 13th Five-Year Plan with deep-rooted reform，exploration and opening-up by launching projects of “One Belt and One Road”，“Collaborative Development of Beijing-Tianjin-Hebei”，“Economic Belt along Yangtze River”，“Free Trade Area” and other regional development plans，together with further accelerating of the “managed opening” of RMB Capital Account. Macro-economic policies are frequently introduced in 2015，which focuses on the steady growth，full scale opening-up and economic restructuring，but it makes less progress in the reform of “vertical” allocation of resources for traditional system. There are some projects to step forward and institutional barriers to break for successful economic transformation，including the reformation of finance-taxation system，transition of administrative system，and reforms of public sectors，public service system，registration system of real estate and land mechanisms.

As the year 2015 and the 13th Five-Year Plan getting critical for China’s “new normal” and new transformation，the top priority for Chinese economic growth is to accomplish “structural reform”，which is the only way to adjust exploration，opening-up and macro-policy to the new route toward sustainable growth driven by innovation，since the strategy and access for China to enter “new normal” is defined as keeping steady growth by policies，accelerating transformation by reforms，and seeking development by layout.

1 Experiences and Forecasts for China’s Economic Development in 2015

In 2015，with the slowdown of economic growth，China’s macro economy experienced several typical events of deflation，starting from the drop of producer price index （PPI） to the decline of national GDP deflator （GDP deflator in the first quarter turned to-1.2% and the total of the annual is expected to be negative）. Such deflation has been spread over the sectors of investment，credit and currency，further leading to the decline of business profits，slowdown of government revenue growth，as well as the instability of personal income. Nevertheless，there are some positive factors：compared with shrinked indirect financing，the capital market has developed rapidly due to the reform and opening up，forming a multi-level equity financing system and raising capitalization rate （proportion of market value of stock in GDP） of China up to the level of 80%；the economy transmission has been promoted by the acceleration of reform and opening-up of interest rate liberalization and exchange rate internationalization；and the future of China has been paved with a sound foundation by the large regional layout of the 13th Five-Year Plan. However，in the short term，the overall economic situation in 2015 is still not optimistic as the growth of GDP is targeted at 7%，while the forecast is 6.9%.

1.1 Experience of China’s economic development in 2015

Chinese government has worked simultaneously from the beginning of 2015 in two aspects，promoting fully the reform and economic transformation by relieving positively the burden of debt previously accumulated through economic growth and policy incentives on the one hand，and on the other hand pushing actively the reforms of financial factors，such as equity market，interest rate liberalization，as well as exchange rate internationalization with expectation of advancing economic restructuring by financial system reforms. The 13th Five-Year Plan opened a path for strategic regional distribution，promoted the economy towards endogenous development by encouraging comprehensive innovation and entrepreneurship. But the transition is still faced with typical threat of widespread deflation on the healthy development of economy. In conclusion，the transition period is characterized with the existence of both challenges and opportunities.

Stylized Fact 1：All-around deflation.