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China eyes supply-side reform for new growth [Copy link] 中文

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Post time 2015-12-25 10:14:41 |Display all floors
BEIJING - As China strives to sustain growth while the effectiveness of traditional demand-side policy support wanes, the country is turning to the other side, the supply side, for new vitality.

The country will take steps to expand aggregate demand while pushing forward "supply-side structural reform" in 2016 and beyond to support growth through new demand and productivity, top leaders at the an ...

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Post time 2015-12-25 10:14:42 |Display all floors
Mismatch has been the real problem with China. This is understandable of an economy that is not completely guided by market forces. With GDP growths as administrative targets, governments(both local and central) created overcapacity in products with no actual demand in reality. For example building massive housings in places where there's no potential for population nor job growths and building roads that go nowhere, thus resulting in overcapacity in related industry as well. This is mismatch. Meantime, there are areas with huge demand that's completely neglected and even ignored. For example, coming up with innovative ways to utilize the airspace over our road system for mass transits, which will solve our traffic congestion, pollution, transportation, logistic, employment and overcapacity problems quickly and cheaply all in one go. No actions have been taken here despite numerous innovative proposals.

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Post time 2015-12-25 10:22:35 |Display all floors
In my opinion, in China, no reforms (supply-side or demand-side or else) can take root without reforming the SOEs. My suggested SPS model is really the most practical way for this reform. This model gets the government completely out of the way of the SOE's forward development, which we all know is really the KEY to SOE reform.

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Post time 2016-1-1 01:25:27 |Display all floors
China needs to reorient its "demand-side" economic model consisting of investments in infrastructure and manufacturing for exports to a "supply-side" economic model of investments in technology and services industries and manufacturing for domestic consumption. The old economic model of investing in infrastructure is necessary for creating public goods and services to be followed by the new economic model of investing in technology and services industries which should create consumer goods and services that promote the social welfare and improve the standard of living for both urban and rural residents.

As an example, investing in high-speed rail provides a public service in mass transportation. But that infrastructure won't be useful unless enterprises start offering consumer goods and services for tourists and travelers to take advantage of that infrastructure. The new economic model of fostering innovation and entrepreneurship means that services industries such as travel and tourism should be encourage to promote the social welfare and improve the standard of living for urban residents who need outdoor activities and rural residents who need new sources of income.

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