In the first three quarters of this year, China's GDP grew by 7.4 percent, or 0.1 points short of the planned annual target of 7.5 percent. The housing market experienced an unprecedented decline in prices and sales in the country's 70 major cities, implying that the pressure on economic growth is historically high, because a chilly housing sector could have massive repercussions on the national economy.

Given the tough external economic environment and rising costs of production in the country, China has managed to maintain a relatively high growth of more than 7 percent. But because of the slowdown in the housing market, the efforts to contain industrial pollution and overcapacity, and the national strategy to change the economic growth model, the government faces tough challenges and constraints in maintaining a relatively high and sustainable growth rate.

The main challenge is how to balance high growth and economic structural change.

There are two important aspects of the structural change in the economy: the balance between the three economic sectors - manufacturing, services and agriculture - and the substitution of high value-added industrial products for low-tech, low-valued goods.

Since 2010 the share of manufacturing in China's GDP has declined by about 1 percentage point a year while that of services has increased at the same rate. Agriculture's share in GDP has maintained its 10 percent level. In addition, economic growth in the inland areas has surpassed that in the coastal belt, reducing their long-term development gaps and, hence, improving spatial income equality.

The second change in the economic structure is the slowdown of growth in some of the major polluting industries such as electricity, cement and steel. For instance, in October, steel production increased by only 2 percent and electricity by 1.9 percent, while cement production fell by 1.1 percent. This is the poorest production record for the sectors in a decade.