China's economy caught in balancing act

After coming into office in March, the new government has refrained from stimulus, moved to streamline administrative systems and vowed to use indicators of people's welfare, social progress and ecological benefits when assessing the performance of government officials.

The leaders will not allow a sudden slowdown, but it does not want to return to the old path either, Zhuang said.

Zhang Yansheng, a researcher at the National Development and Reform Commission, warned that China will risk losing the opportunity to acquire long-term growth potential and global competitiveness if it does not reform and adjust.

Zhang offered a different perspective on the slowdown, saying that while China's growth slid to a 13-year low last year, its urban employment reached the highest level of the past decade, final consumption contributed more to the economy than investment did and residential incomes rose faster than the economy.

"It will make for fine growth if these indicators are still good," he said.

Official data showed that the country's labor market remains robust. Demand for workers healthily outstripped supply in the second quarter of the year, as there were 107 job opportunities for every 100 job seekers.

Li's speech did not define the government's limits, but some economists believe that the economy can still expand by around 7 percent without government stimulus.

"The growth momentum gained from the processes of industrialization and urbanization alone will support the country's steady growth," said Zhang Liqun, a researcher at the Development Research Center of the State Council.

The cash crisis showed that reforms are more crucial than ever in the country's efforts to defuse long-term economic risks, he said.