The People’s Bank of China is considering allowing foreign companies to issue shares on the mainland as part of its drive to reform the convertibility of the yuan and open up China’s capital market.

China’s near-term economic outlook is being buoyed by policy support even as its medium-term prospects become more uncertain because of rapidly rising credit, excess industrial capacity and financial sector risks, the International Monetary Fund said.

China’s economic growth has been slowing for six years – far longer than expected. Eager to stem the slide, Chinese government officials and economists have desperately sought a clear explanation pointing toward an effective policy response.

In 2015, China’s growth was again at the center of international headlines, but the focus was instead on the slowdown of the world’s second-largest economy. Much has been made of China’s adjustment to the “new normal,” even as US-China Business Council (USCBC) companies reported that China remains a priority market that delivers more growth than most other markets around the globe. But China is not a monolith, and local-level growth patterns suggest the emergence of the new model.

Only by totally abandoning the current growth model, which relies on credit investment and the real estate industry, can China’s economy escape the dangers posed by the potentially risky debts on its commercial banks’ financial sheets that may exceed $1.3 trillion. The majority of bank loans have flown into the real estate market, which will become instantly volatile if and when housing prices begin to slide.

China’s economy will constantly have to overcome contradictions and problems, as it explores new avenues for economic growth in a period of recurring volatility. Current indicators are positive, but as the economy steadies itself for the long term, it will fluctuate and experience reverses during the short term.

The downward pressure on GDP growth has eased a bit and the economy has rebounded somewhat, mainly because of government investment in infrastructure and the real estate speculation despite a lack of domestic residential demand. Therefore, the state of China’s economy remains a mixed picture.

Driven by factors such as unprecedented financing growth and increased investments by governments, the economy in the first quarter showed an obvious marginal improvement, which could maintain until June. The price includes an excessive money supply, a rising leverage level and the structural aggravation, therefore, doubts remain whether such improvements could sustain for the long term.

Chinese Finance Minister Lou Jiwei sat down with The Wall Street Journal in Washington on the sidelines of a Group of 20 gathering of finance chiefs that he co-chaired.

China’s economy grew at 6.7 per cent in the first quarter of 2016, down slightly from the end of last year but comfortably within the government’s targeted range, as housing and infrastructure cushioned a slowdown from financial services.