The importance of “supply-side reform” was emphasized by Xi Jinping at the 11th meeting of the CPC Central Leading Group for Financial and Economic Affairs on November 10, 2015. Reform on the supply-side (supply and production) is the counterpart of that on the demand-side. The goal is to unleash productivity and maintain a competitive edge, with greater innovation, decommissioning of obsolete maufacturing, less overcapacity, and lower tax rates, so as to boost the economy.
The main aims of this reform policy are to optimize the economic structure and enhance the efficiency of all contributing factors. To this end, measures will be implemented to streamline government and delegate powers, to relax macro-regulation, to spur innovation, and to extend reform in the financial sector, in land use rights, and in the management of SOEs. Greater emphasis on supply-side reform will fuel domestic demand and replenish supply. Innovation on the supply-side can generate demand, and heavier demand can in return generate improvements in supply, so that steady growth and structural adjustment proceed in parallel.