CHINA-ECONOMY: XI JINPING'S EXPLANATION OF 'SUPPLY-SIDE ECONOMICS'

 People's Daily, the official mouthpiece of the CCP, published the official explanation of President Xi Jinping’s hallmark economic policy on May 11, 2016. Thes explanation – a 20,000-character transcript of Xi Jinping's speech made  in January to principal ministerial and provincial officials, occupied two pages in the newspaper – and is the most comprehensive elaboration of Xi Jinping's thinking on the Chinese economy’s past, present and future and its role in the global economy since he became the country’s leader more than three years ago. 


Xi Jinping said "I need to be clear, the supply-side structural reform we are talking about is not the same as the supply-side economics school in the West. We] must prevent some people from using their interpretations [of supply-side reform] to promote ‘neo-liberalism’.” He explained that China’s supply-side reform was more than “an issue of tax or tax rate” – it was a slew of structural measures to seek innovation, prosperity and well-being. Stating that some Chinese officials did not understand the point of supply-side reform, he said “I highlighted the issue of supply-side structural reform at last year’s central economic work conference, and it triggered heated debate, with fairly good endorsement from the international community and various sides at home. But some comrades told me that they didn’t fully understand supply-side reform ... I need to talk about this issue again.” Xi said the concept could be implemented by “cutting capacity, reducing inventory, cutting ­leverage, lowering costs, and strengthening the weak links”. He added “Our supply-side reform, to say it in a complete way, is supply-side structural reform, and that’s my original wording used at the central economic work conference. The word ‘structural’ is very important, you can shorten it as ‘supply-side reform’, but please don’t forget the word ‘structural’,” Xi Jinping said.

Xi Jinping also said while China was the second-biggest economy in the world, its economy was “big but not strong” and faced “outstanding problems of unwieldiness, puffiness and weakness”.He added that “The main symptom is limited innovation, and that’s the ­Achilles’ heel of China’s [macro] economy.”
 






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