How to win the tough battle of the structural reform

By Wen Sen (chinadaily.com.cn) Updated: 2015-12-31 13:24

The Central Economic Working Conference has clearly put forward the five targets of the structural reform in the next year including de-capacity, de-stocking, de-leveraging, cost-reducing and pitch-up in weak growth areas.

Considered from the actual economic pressure of the first year of the 13th Five-Year Plan, in my opinion, the first thing is to relieve the pressure in these five aspects. The five aims are in essence correlative and interrelated. It is not exaggerated to say that one slight move will affect the situation as a whole. De-capacity is a crucial task. The structure, economic cycle and institution should be blamed for over capacity.

For instance, there is a shocking phenomenon that the profit of one ton of steel is less than that of 0.5 kilogram cabbage. This year, the price of coal has fallen to the lowest point in record and the plummeted international oil prices have dragged down the price of crude oil, etc.

On the back of localizing measures and differentiated solution, the macro policy and industrial policy should actively direct the overcapacity to transform into abundant capacity, relieving it through opening up the industrial developing channels in the Midwest and seeking international cooperation.

It is necessary to connect de-stocking with lower corporate costs, actually relieve their burden through tax and pricing policy and accelerate the technological reform and equipment upgrade. We should connect de-stocking of real estate among second- and third-tier cities while promoting urbanization and expanding supply of public service.

As for the prevention and mitigation of financial risks, we should guard against the bottom line while actively implementing targeted structural monetary easing policy and try to improve the construction of multi-leveled capital markets. Therefore, in order to solve the problem of "five drops", it is essential to replace the structural burden with structural reform and structural shortage-repairing.

In my opinion, we should also stress "five increases", or known as vitality increase, momentum increase, efficiency increase, equilibrium increase and confidence increase. We should push up innovation in institution and supply, further eradicate the interests of the barriers, streamline administration and delegate power to lower levels, give power to market and society in order to stimulate the vitality of enterprises, society and popular entrepreneurship.

We should accelerate the development of new industries, new business models and new organizational systems and push up the new momentum for economic growth in order to generate new supply and demand. We should take effective policies to promote the balance of regional development, of urban and rural dual economy, of industrial development , of the development between resource and environment and of the development interests at all levels in the following five years.

At last, confidence increase is worthy of being stressed. Despite difficulties in China's growth, just as what President Xi Jinping has pointed out, there is no change in China's economic fundamentals or its long-term trajectory for the better; there is no change in its basic features of strong resilience, enormous potentials and ample room for growth; there is no change in the good base and conditions for the economic sustainable development; there is no change in the forward momentum of adjusting and optimizing economic structure.

The whole party should insist on appealing to the initiatives of all groups and their enthusiasm and creativity. If all groups are united as one, there will be no difficulties that can never be overcome.

The 12th Five-Year Plan has made a great achievement and now we are on a new beginning again. With the new guideline of innovation, coordination, green, opening-up and sharing, the 13th Five-Year Plan is sure to turn on a new chapter.

The author is a PhD in Economics at the Chinese Academy of Governance. The story is first published on China Youth Daily.