Stability is the key as further reforms loom

Bottom line for growth

China will unveil its official growth target for 2014 when Premier Li Keqiang delivers the government's work report in March. Barclay's Chang said "a 7 percent target would signal the absolute bottom line for growth."

Meanwhile, key economic data still point toward the upside.

In the third quarter of this year, China's gross domestic product expanded 7.8 percent from a year earlier, accelerating from 7.5 percent in the second quarter.

The Consumer Price Index expanded 3 percent in November, slowing from an eight-month high of 3.2 percent in October.

Inflation for 2013 is expected to come in at around 2.7 percent, which is well below the target of 3.5 percent.

Other activity data, including industrial production, fixed-asset investment and retail sales, all maintained double-digit growth in the first 11 months of the year. Industrial production and investment both showed moderating growth in November, with retail sales emerging as the star performer. That will hearten officials anxious to move the economy away from over-reliance on exports and investment and toward consumer spending.

Stephen Green, an economist at Standard Chartered, said growing household consumption, renewed export growth and the bottoming out of the industrial cycle will be positive drivers in 2014.

Still, he said, there are reasons for caution. He cited the possibility of tighter monetary policy, a slower property market, a cash crunch related to local government infrastructure and a mild rise in inflationary pressure.

These potential drags on growth are not new. How they will interact with progressive reforms is the big unknown.

Zhu Haibin, chief economist for China at JPMorgan, said he expects China's economic growth to come in at 7.4 percent next year, assuming a policy shift toward structural reforms such as limiting the scale of government spending and reducing excess capacity in state-owned enterprises.

The late December credit crunch may be a case in point, illustrating the tug-of-war between reform and growth as China moves to limit government interference in the market.

But, as Standard Chartered's Green noted, reform requires a certain level of growth to ease its implementation and the benefits from structural reform will likely not show up quickly enough to impact growth in 2014.

Next year is certainly shaping up as an interesting one to watch as China juggles the forces that define its economy.