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Supply-Side Structural Reform May 13, 2021



Supply-Side Structural Reform

According to Xi Jinping, the key to supply-side structural reform is to release and develop productive forces. The reform focuses on both supply and demand, aims to develop productive forces and improve relations of production, allows the market to play its decisive role in resource allocation and the government to better fulfill its functions, and looks to address both present and future needs. An idea first proposed in 2015, supply-side structural reform is the current priority in China's economic work.

China has adopted different policies to proceed with the reform in tandem with its economic and social development. In 2015, the reform focused on "cutting overcapacity and excess inventory, deleveraging, reducing costs, and tackling areas of weaknesses"; in 2017, the emphasis was on "cutting ineffective supply, fostering new growth drivers, and reducing costs"; and in 2018 the attention was on "consolidating, strengthening, upgrading, and ensuring unimpeded flows."

Supply-side structural reform reflects the theory and practice of the CPC Central Committee with Xi at its core, based on an overall analysis of the world economic cycle and the features of China's development, and the interaction between them. It enriches China's vision of the new normal economy and the socialist political economy with Chinese features, and also heralds a new era in the country's reform and opening up, macro regulation, and economic structural adjustment. Supply-side structural reform guides China's battle against poverty while accelerating the development of poor areas.