China's 'supply-side structural reform' to solidify bedrock for sustainable development

BEIJING - China's supply-side structural reform holds the key to its structural adjustment in the short term and will solidify the bedrock for the sustainable development of its economy in the long run, overseas experts have observed.

Marking a crucial year for China to comprehensively deepen its reforms, 2015 saw the birth of its development blueprint for the next five years amid a decelerated domestic economy and an unstable global one.

At a recently concluded key economic meeting in Beijing, the Chinese government pledged to take steps to push forward a "supply-side structural reform" in 2016 and beyond to support growth through new demand and productivity.

China's announcement of a supply-side structural reform came at a critical moment, and is considered as an innovative move to guide the world's second-largest economy under the "New Normal" and a proactive decision to make it internationally more competitive.

New ideas, new momentum

The choice of supply-side structural reform indicates that China does not intend to employ traditional stimulus measures, Ulises Granados, professor of international relations at Mexico Autonomous Institute of Technology, told Xinhua.

It shows that China is seeking an innovative way to stabilize growth and adjust its economic structure with fresh ideas, thus trying to find a new path for its sustainable economic development, the scholar added.

The Japanese newspaper Nikkei said in a recent report that China's push for a supply-side structural reform is markedly different from the massive stimulus policies used since the outbreak of the Lehman crisis that triggered the financial earthquake in the global market.

Under the "New Normal," flooding stimulus measures would no doubt boost economic growth in the short term but not be able to increase potential growth with an ideal rate, while risking huge waste.

The International Monetary Fund said the decline of the global potential growth rate was the major contributor to the sluggish recovery of the world economy.

Figures showed that the average potential growth rate of the emerging economies between 2008 and 2014 was 6.5 percent, 2 percentage points lower than the level before the financial crisis.

As its population dividend dwindles and land resources become more scarce, China's potential growth rate has also shrunk. However, this leaves room for a supply-side structural reform under the "New Normal" that aspires for more sound growth.