In the first three quarters of 2012，China’s industrial economy，as a whole，is in a downward trend.The reasons are the decline in the growth rate of potential output and the negative high degree output gap.China’s industrial economy would present four characteristics in next phase：firstly，the industrial economic growth will be in stabilized speed；secondly，industrial transformation and upgrading will become an important driving force for the growth；thirdly，equipment manufacturing，materials and other heavy industry will remain important growth sections in the industrial economy；fourthly，county economy will become more important in the industrial economy.Therefore，China should lower expected industrial growth，avoid the introduction of large-scale economic stimulus policies，strengthen policy support to promote enterprise restructuring and upgrading，and expedite the reform of institutional mechanisms.