The second great transformation of China’s economy is underway, and it won’t happen without some pain.

China’s meager GDP growth of 4.9% in the third quarter is both worse and better than it looks. Net of exports, GDP growth would have fallen to around 1%, mainly due to the air pocket in the property sector that comprises a quarter of GDP.

The good news is that China’s industrial supply chains rose to the occasion and compensated for disrupted manufacturing output elsewhere in the world. September exports rose 28% year-on-year.

China wants to shift investment toward high productivity outlets in manufacturing and services, away from construction. Its strategy depends on harnessing the new technologies of the so-called Fourth Industrial Revolution, which offer a high growth path for a country with a stagnating labor force.