Reform brightens China's economic prospects

A report from the Chinese Academy of Social Sciences set the growth rate at 6.7 percent for this year. The World Bank also forecast 6.7 percent, while Zhu Haibin, J.P. Morgan China chief economist, maintained his full-year growth forecast at 6.6 percent.

"The economy will likely start to hold steady at the beginning of the year as policies and reform measures continue to take effect," said Zhang Liqun, researcher with the Development Research Center of the State Council.

China has made progress in restructuring the economy to sustain growth.

Domestic consumption and the service sector have become stronger forces driving economic growth. Consumption contributed 66.4 percent to GDP in 2015, up 15.4 percentage points from 2014, while the service sector created more than half of GDP for the first time ever.

UBS economist Wang Tao said she expects consumption and retail sales to be relatively resilient this year thanks to measures to boost employment and improve the social safety net.

Robust emerging industries are being fostered, and outdated and excessive production slashed.

Emerging industries and new business models became bright spots in the slowing economy. Online retail sales surged 31.6 percent and the growth of high-tech industries reached 10.2 percent, both well above the general average growth.

New industries such as e-commerce and new energy vehicles have added confidence, Wang said.

China prioritized overcapacity reduction in its economic tasks in 2016 as saturated sectors like steel, coal and cement have become a major drags on the broader economy.

The policy may impact short-term growth but will be a boon for sustainable development in the long run, said Lian Ping, chief economist with Bank of Communications.

The government will also cut inventories, de-leverage, reduce corporate costs and improve weak sectors in 2016.

In addition to reform measures, economists said regulators will continue to adopt pro-growth measures to reassure markets.

Julia Wang, HSBC Greater China economist, said both monetary and fiscal easing measures are needed to help support demand and anchor expectations.