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Haikou Jiangdong New Area
Economy

Commentary: Supply-side reform enhances resilience of Chinese economy

April 23, 2019


Abstract : The Chinese economy posted faster-than-expected growth in the first quarter, as supply-side structural reform enhanced the inner strength of the world’s second-largest economy.

BEIJING, April 22 (Xinhua) -- The Chinese economy posted faster-than-expected growth in the first quarter, as supply-side structural reform enhanced the inner strength of the world’s second-largest economy.

As China steps into a new stage of development, supply-side structural reform, which supports economic growth through productivity improvements and tax reduction, has gradually become the main driving force of economic growth.

Given downside risks of the economy from slowing global economic growth and a weakening export outlook clouded by the trade protectionism, investors expect the growth of China to weaken in 2019 from that recorded a year earlier.

To revive confidence and boost business activity, China announced a set of stimulus measures. Different from previous stimulus packages, the government did not rush to inject fresh liquidity into the economy. Instead, structural reform measures such as deleveraging, credit loosening and tax cuts were taken, mainly targeting the private sector.

Private business accounts for more than 80 percent of China's urban employment and over 60 percent of the country's GDP. Good implementation of supply-side reform could release huge pent-up demand in this particularly important sector of the economy.

The supply-side reform has produced positive results, which were reflected in China's better-than-expected economic performance in the first quarter. Industrial production and retail sales have posted faster-than-expected growth in March. It shows the supply-side reform has generated self-sustained recovery of the economy.

The end goal of supply-side reform is to improve the efficiency of resource use and promote economic growth. When good resources go to the right places, greater benefits will be generated.

China's long-term growth prospects will continue to depend on further reforms. The country is on its way to improving its economic efficiency and sustaining future growth without the need for a stimulus package.

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Keyword: supply-side-reform china-economy

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