The real economy is still slow as we step into the second half of the year while the current stock market downturn has accidentally become the concern of the top policy makers. Abound's research team is of the view that the China's economic policies for the second half will depend on the macroeconomic trends during the first half, the seriousness of the local debt, the room for fiscal policies and the external economic environment. The increased fiscal deficit is not only the result of the downward pressure on the economy but also corrective measures taken by the policy makers. The Chinese government will use every resource available to ensure that the 7% economic growth target will be met. As such, the already aggressive measures will certainly become even more aggressive and it seems like the size of the fiscal deficit is bound to increase during the second half of this year.