Correctly understand and effectively promote supply-side structural reform

Not long ago, General Secretary Xi Jinping stressed at the 13th meeting of the Central Financial and Economic Leading Group that promoting structural reform on the supply side is an important decision made by comprehensively judging the world economic situation and the new normal of China's economic development. Today, I would like to take this opportunity to talk about my preliminary understanding of how to correctly understand the structural reform on the supply side, how to grasp the key points of the structural reform on the supply side, and how to ensure the effective promotion of the structural reform on the supply side for your reference.

I. How to understand the connotation of supply-side structural reform

As we all know, there is a lot of discussion in society about supply-side structural reform. But what exactly is "supply-side structural reform" and what is not, it seems that it is not very clear, and some even misread. So, what is the real meaning of supply-side structural reform? I think we need to at least grasp the following "two yes, three no":

First, the essence of supply-side structural reform is reform. Supply-side structural reform is, first of all, reform, and the object is institutional mechanism, which is the essence of supply-side structural reform. Leaving the essence of this "reform" and talking about supply-side structural reform will deviate from its original meaning. In fact, only from the Chinese grammar, whether it is "supply-side structural reform" or "supply-side reform", it is a positive structural phrase,"supply-side" is attributive,"reform" is the central word, obviously "reform" is the central meaning. As pointed out by the General Secretary, the essential attribute of supply-side structural reform is deepening reform. Supply-side structural reform is to change some old systems on China's supply side that hinder the supply structure from adapting to changes in demand. Therefore, although "three go, one drop and one supplement" is a major task of "supply-side structural reform", it is not the reform itself. The key is to see who does it and how. Reform is aimed at institutions, not at problems or mandates themselves.

Second, supply-side structural reform is structural reform. The general secretary stressed that the supply-side reform we proposed is completely "supply-side structural reform", which can also be referred to as "supply-side reform", but we must not forget the three words "structural". In fact, I understand that supply-side structural reform is structural reform. Without the essence of "structural", it is meaningless to talk about supply-side reform. The term structural reform actually comes from the West and emphasizes the reform of the relationship between government and society, government and market, government and enterprise, such as the reform of labor market and welfare system in Europe. In China, structural contradictions are more prominent, especially the problem of overcapacity. There are special institutional reasons for this problem, mainly the distortion of the relationship between government and enterprises. In fact, the supply side was not originally a problem. The reason why there was a problem was that there was a "tangible hand" that was counteracting. Supply-side structural reform is to straighten out these relations, so that the market can really play a decisive role in resource allocation, and let the "zombie enterprise" that should be buried be "buried in peace".

Third, supply-side structural reform is not equal to supply-side ideas. The general secretary stressed that the supply-side structural reform we are talking about is not the same as the supply-side school of western economics, and the supply-side structural reform cannot be regarded as a replica of the western supply-side school. As we all know, the supply-side school is an economic school that emerged in the United States in the 1970s. Supply-side economics believes that the growth of production depends on the supply and effective utilization of factors of production such as labor force and capital. Supply-siders argue strongly for large tax cuts, arguing that tax cuts encourage people to work more. Although supply-side structural reform also includes the requirement of reducing taxes and fees to reduce the burden on enterprises, not only the nature of reform is fundamentally different from that advocated by supply-side school, but also the scope of reform far exceeds that advocated by supply-side school.

Fourth, supply-side structural reform is not equal to structural adjustment. There is now a misunderstanding that supply-side structural reform is structural adjustment. In fact, although supply-side structural reform is related to structural problems, it is not equivalent to structural adjustment either in connotation or in specific measures. In the past, economic, legal and administrative means were usually used for structural adjustment, and administrative means were more often used. Obviously, although this supply-side structural reform does not exclude necessary administrative and legal means, such as reducing loss subsidies, stopping zombie enterprise loans, implementing enterprise bankruptcy according to law, etc., it is different from the past that the structural adjustment will mainly solve problems through reform methods and starting from institutional mechanisms. Supply-side structural reform is precisely the active choice made after reflecting on the traditional structural adjustment mode.

Fifth, supply-side structural reform is not a new planned economy. There is now a saying in society that promoting supply-side structural reform is to engage in a new "planned economy." This is clearly a misunderstanding. The key to supply-side structural reform is to further stimulate the vitality of market entities and better play the decisive role of the market in resource allocation. This is the perfection of the socialist market economic system and by no means a return to the old path of planned economy. In the past, it was precisely because the role of the market mechanism was not brought into full play and the government intervened too much that the market could not be cleared in time and caused various structural contradictions. Although there may be various different schemes for supply-side structural reform, I think such schemes, even if they are called "plans," are not planned economies in the original sense. What is needed now is structural reform. If we only adjust the structure without changing the system, we will inevitably fall into the strange circle of "adjustment again in a few years". This is precisely the problem that supply-side structural reform should solve.

II. How to Grasp the Key Tasks of Supply-side Structural Reform

Promoting supply-side structural reform is the main line of China's economic work at present and in the future. The task of supply-side structural reform is arduous and arduous, which can be simply summarized as: one core, three aspects and five key points.

First of all, a core is to deal with the relationship between the government and the market. This is the core issue of economic system reform and the fundamental task of supply-side structural reform. The purpose is to make the market play a decisive role in resource allocation and better play the role of government. Supply-side structural reform is to start from the supply side, promote system reform in view of major structural problems, break down all institutional mechanisms that hinder the development of social productive forces, and accelerate the transformation from the traditional planned economic system to the market economic system.

Second, in the long run, it is necessary to establish and improve a supply system that adapts to changes in market demand. This system includes three aspects: micro-subject, market system and market management. The general purpose is to improve the market environment, stimulate enterprise vitality and consumer potential. In accordance with the spirit of the Third Plenary Session of the CPC Central Committee, the reform directions in these three aspects are as follows: First, we should equally protect the property rights and legitimate interests of all forms of ownership economy according to law, ensure that all forms of ownership economy use factors of production equally according to law, participate in market competition openly, fairly and impartially, and develop mixed ownership economy. Second, we should build a unified, open and orderly competitive market system, strive to eliminate market barriers, break down industry monopolies and local protection, and improve the efficiency and fairness of resource allocation. Third, efforts should be made to solve the problems of excessive government intervention and inadequate supervision, greatly reduce the direct allocation of resources by the government, promote the allocation of resources by relying on market rules, market prices and market competition, and maximize benefits and optimize efficiency.

Finally, in the near future, it is necessary to fully implement the five key tasks of "de-capacity, destocking, deleveraging, cost reduction and short board replenishment". First, actively and steadily resolve overcapacity. In accordance with the methods of enterprise main body, government promotion, market guidance and legal disposal, excess capacity and "zombie enterprises" should be disposed of in an orderly manner according to local conditions and categories. The second is to resolve real estate inventory. By accelerating the urbanization of migrant workers, expanding effective demand, opening up supply and demand channels, digesting inventories and stabilizing the real estate market. Third, prevent and defuse financial risks. We should deal with credit default according to law, effectively resolve local government debt risks, standardize various financing behaviors, and properly handle risk cases. The fourth is to help enterprises reduce costs. Including reducing institutional transaction costs, corporate tax burdens, social insurance premiums, corporate financial costs, electricity prices, logistics costs, etc. Fifth, expand effective supply. We will fight hard against poverty, support technological transformation and equipment renewal of enterprises, cultivate and develop new industries, new products and new formats, and make up for shortcomings such as soft and hard infrastructure and human investment.

The core of these five tasks is to deepen reform. To reduce production capacity, we must dispose of "zombie enterprises","weaning" those who should be "weaned", and cut off loans if they should be cut off. To destock, we must intensify the reform of the household registration system and establish and improve the supporting systems such as finance, taxation and land for migrant workers to enter the city. To deleveraging, we must break rigid payment in an orderly manner and push forward financial reform. To reduce costs, we must promote the reform of taxation, social security system, monopoly industries and the transformation of government functions, reduce the overall tax burden, cancel unreasonable fees and reduce administrative examination and approval. To make up for the shortcomings, we must promote precise poverty alleviation and poverty alleviation, improve the scientific and technological innovation system, promote the construction of ecological civilization system, improve the infrastructure investment and financing mechanism, and solve the institutional problem of "where money comes from and where it goes".

III. How to ensure the effective promotion of supply-side structural reform

The general secretary stressed that the structural reform on the supply side has a long-term relationship with the overall situation and must be carried out effectively. Under the current situation that the downward pressure on the economy is still relatively large, the production and operation of some entity enterprises are still difficult, and the market risk points increase, how to ensure the effective promotion of structural reform on the supply side? The Central Economic Work Conference put forward five policies to be implemented in coordination with each other. The meeting of the Political Bureau of the Central Committee held on April 29 further clarified the relevant policies and guidelines. In my experience, it is mainly to achieve "three stability, two transfers".

First, stabilize macroeconomics. This is to create a stable macroeconomic environment for structural reforms. To this end, we should persist in moderately expanding aggregate demand, implement a proactive fiscal policy and a prudent monetary policy. The proactive fiscal policy should be truly proactive, and the prudent monetary policy should be truly prudent, paying attention to grasping the key points, rhythm and intensity. We should maintain our determination, avoid using leverage to push forward economic growth, and ensure that the policies set by the central government will not deviate or deform.

Second, stabilize the market. It is mainly to maintain the stability of financial markets and prevent systemic regional financial risks. The central government has made clear the policy orientation of the stock market, foreign exchange market and real estate market, which is to return to their respective functional orientation, respect their respective development laws, and cannot simply be used as a means to ensure growth. We must maintain the healthy development of the stock market, give full play to the regulatory role of the market mechanism, strengthen the construction of basic systems, strengthen market supervision, and protect the rights and interests of investors. It is necessary to maintain the basic stability of the RMB exchange rate and gradually form a two-way floating and flexible exchange rate operation mechanism based on market supply and demand. We should maintain the stability of the real estate market, digest the real estate inventory in an orderly manner, pay attention to solving regional and structural problems, and implement differentiated regulation and control policies.

Third, stabilize social employment. In the process of reducing production capacity, we should properly handle the problem of laid-off and unemployment. Some should be transferred to other posts, some should help them solve their living difficulties, some employees of bankrupt enterprises should be directly included in the subsistence allowance, and some should receive training to improve their re-employment ability. At the same time, social policies should be underpinned, better play the role of social protection stabilizer, focus on the bottom, guarantee the basic livelihood of the masses, guarantee basic public services.

Fourth, motivate entrepreneurs. Supply-side structural reform, whether it is the disposal of "zombie enterprises", the digestion of real estate inventory, and the increase of effective supply, is inseparable from the active participation of entrepreneurs. We should adhere to the basic economic system, guide social psychological expectations, attach importance to the protection of property rights and intellectual property rights, improve the business legal environment, strive to create a good market atmosphere that supports business, ensures business and benefits business, and give full play to the important role of entrepreneurs.

Fifth, mobilize the enthusiasm of cadres at all levels. At present, all parties have continuously improved their understanding of promoting structural reform on the supply side. Relevant departments have issued some policies and measures, and many regions have studied and formulated comprehensive plans and special plans. The state will also formulate a series of policy measures and reform programs. Whether it is the formulation or implementation of policies and programs, cadres at all levels are required to take responsibility. Only by fully mobilizing the enthusiasm of cadres, especially leading cadres, can we ensure that all measures of supply-side structural reform are implemented and effective.

In short, promoting supply-side structural reform is a major innovation to adapt to and lead the new normal of economic development. We should deeply understand its background of the times, accurately grasp the basic requirements, combine our own work, actively devote ourselves to this work, and promote the sustained and healthy development of economy and society.