10 Proposals for Further Deepening Reform: Supply-side Structural Reform
Shenzhen Innovation and Development Institute (SZIDI) released the China Reform Report 2017 in May 2018. Entitled Reform on Route, this year’s report evaluates twelve major aspects of the reform process in 2017, concludes reform experiences from the past five years and makes predictions on the future trend of reform in 2018 with ten policy recommendations. The report identifies 2017 as a crucial year during which series of planning and design culminate into implementation, and historical breakthroughs and periodical progresses rise to the surface.
The report points out that China’s gloomy economic growth rate since 2010 results from
l prevailing GDP-centered growth model across the country
l government’s dominant role in the distribution of resources
l excessive currency liquidity due to sustaining lax monetary policy
l dramatic increases of indebted SOEs
l drawbacks from existing land system and fiscal policies
The past structural reforms have touched on systematical reforms but have not achieved major progress. After the 19th Party Congress, the report suggests that China should continue to implement the five major tasks of the supply-side structural reform, including cutting excessive industrial capacity, destocking, de-leveraging, lowering corporate costs and shoring up the weak spots. China should also set mid-long term goals and economic policies to address the structural imbalances in Chinese economy. The report thus offers five policy recommendations, including
l adjusting the achievement assessment system of government officials
l ending the assessment based on GDP numbers
l continuing with prudent monetary policy
l adjusting fiscal expenditure and gradually modernizing the fiscal system
l restructuring state-owned economy to alleviate the structural imbalances in Chinese economy
l launching land reform to better allocate and redistribute land resources, and to narrow the income gap
