China’s economy expanded rapidly in recent years despite a dire international context, though it slowed in 2011-12. Rebalancing has made headway: externally, the current account surplus has fallen sharply, from over 10% of GDP in 2007 to under 3%; domestically, growth has lately been pulled more by consumption than by investment. With the slowdown, inflation has been brought under control. More recently, activity has regained momentum, helped by policy easing and a pick-up in infrastructure spending, but the global economic context remains fragile. If needed, there is room for further cautious monetary and fiscal stimulus. In a longer-run perspective, China has now overtaken the euro area and is on course to become the world’s largest economy around 2016, after allowing for price differences. Living standards will continue to improve fast provided reforms are implemented, most of which feature in the 12th Five-Year Plan (2011-15) and in the conclusions of the November 2012 18th CCP Congress.