Driven by the new or shackled to the old

When the Politburo makes a pledge, no one can have any doubt that it means business. Capital markets have reacted positively since the Politburo meeting at the end of last month, chaired by President Xi Jinping, said China would maintain its economic growth over the second half of the year to achieve its annual target of 7.5 percent from last year.

The bottom line is clear: The 7.5 percent target must be met, even though a slowdown from the previous double-digit growth is accepted, and to some extent welcomed in squeezing out overcapacity in some industries. To hold up the bottom line, some micro-incentives are on offer, most noticeably the central government's investment packages on reducing air pollution and modernizing railways in central and West China.

This being the case, investors must be clear that China's growth in the second half of this year will not match earlier growth. Nationally, that will happen in just a few industries. At the provincial level, other than in industries encouraged by national policies, growth will come mainly from services.