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Structural Reform — A Good Recipe Prescribed by China

Submit Time:13-07-2017 | Zoom In | Zoom Out

Author:Wu Qiuyu | Source:People's Daily

Abstract:

  In the context of sluggish global economic growth, the Chinese economy has maintained steady growth, thanks to the structural reform as a correct recipe.

  China's structural reform has drawn the world's attention and been highly praised. Recently, the Technical Report on Progress on Structural Reform Under the G20 ESRA submitted by the Organization for Economic Cooperation and Development (OECD) suggested that China's structural reform has made positive progress, with remarkable results. The report, which was endorsed by the G20 Finance Ministers and Central Bank Governors Meeting, made the world see the hope of coming out of the economic downturn.

  Practices adopted since the international financial crisis have proved that economic stimulus policies that dealt with problems on an ad hoc basis not only could not bring the world economy out of the quagmire, but also led to diminishing ">However, it is wrong to try anything when in a desperate plight. Suiting a method to the situation is the fundamental cure. In the face of new problems encountered under the new normal of economy, China did not adopt strong stimulus policies on a large scale, but tried to promote the supply-side structural reform in a bid to solve the present main economic contradictions. According to the OECD report, although China's per capita income grows relatively slowly as opposed to the level before the international financial crisis, the growth remains high. In the context of sluggish global economic growth, the Chinese economy has maintained steady growth, thanks to the structural reform as a correct recipe. The supply-side structural reform provides a cure to revitalize the world economy and has been increasingly recognized by the international community.

  The success of the Chinese solution hinges on the transformation of economic growth models. From the maiden flight of the first Chinese-built passenger jet, the stable mining of combustible ice, to the international leading technology of the fourth-generation high-temperature gas-cooled reactor nuclear power, the Chinese economy is experiencing the historical transformation from investment-driven growth to innovation-driven growth. The supply-side structural reform, with focus on the improvement in the supply quality, has eliminated a large number of repetitive and inefficient excess capacities and provided a platform for growth of high and new technologies, emerging types of business and new business models. The extensive application of the Internet, big data and cloud computing has revitalized traditional industries and new drivers of growth have gradually worked. In 2016, based on the purchasing power parity (PPP) at constant prices, China's labor productivity approximately doubled the level before the 2007 international financial crisis, reflecting the increasingly stronger endogenous power of economic growth.

  The success of the Chinese solution also relies on economic restructuring. Under the new normal, structural adjustment and transition of growth drivers are accompanied by the slowdown in economic growth. Despite the economic growth below 7%, an annual average of more than 13 million people were newly employed for four years in a row, showing that the quality of China's economic growth has continued to improve. China's tertiary industry grew by 7.8% in 2016, accounting for 51.6% of GDP, up 1.4 percentage points year on year. The total amount of trade in services exceeded RMB 5 trillion for the first time, making China the world's second largest importer of services and the third largest exporter of serves. Looking at the world, China's successful advancement of economic restructuring has played a significantly positive part in the world economy. With the in-depth progress of the "Belt and Road" construction, an era of common development and prosperity is coming.

  The success of the Chinese solution also depends on the comprehensive deepening of the reform. The reform is the biggest dividend and also the fundamental way to promote development. Reform measures include streamlining the administration and delegating more power to lower levels, in order to substantially reduce administrative intervention, improve the overall economic efficiency, and give market players a free hand; cutting taxes and fees, in order to save more than one trillion yuan for market players each year and help enterprises fulfill their potential without any burdens; and establishing the negative list system, in order to break industry access barriers, promote investment and trade facilitation, and launch a new round of reform and opening up in free trade zones. The reform roadmap charted by the Third Plenary Session of the 18th CPC Central Committee was carried out smoothly. Reforms in all fields with "multiple pillars" have been basically introduced. China's "reform" is provoking a stronger development momentum.

  As a saying goes, "When it is time to reform, if one does nothing because of fear, he will lose the opportunity, which may cause more damages." The structural reform is a tough fight under the new normal of the Chinese economy and more heavy tasks are yet to come. In the face of praise, we should stick to what we do regardless of difficulties, risks and pains. We are determined to advance the supply-side structural reform to lead the new normal, and propel the Chinese economy to higher quality, more efficient, more equitable and more sustainable growth.


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