Home Daily Blitz The Great China Supply-Side Revolution? Communists Change Tack

The Great China Supply-Side Revolution? Communists Change Tack


bloomberg articleThe following is an excerpt from Bloomberg.com | December 13, 2015 |

When China’s top Communist Party officials met in October at the heavily guarded Jingxi Hotel in Western Beijing to ink a new five-year economic plan, a significant policy shift was discussed.
Assembled policy makers were reviewing how a year-long effort to stoke demand with interest-rate cuts and fiscal spending had done little to accelerate growth. At risk was President Xi Jinping’s aim to keep the $10 trillion economy growing by a minimum of 6.5 percent through 2020, the pace deemed necessary to become a "moderately prosperous society."

During the meeting, the discussion explored stepping up supply-side reforms such as dealing with overcapacity and excess labor in state-owned industries and tax cuts, according to a party official familiar with the discussions. Applying the supply-side theory that embraces productivity gains and reduced tax barriers could reinvigorate the public sector while potentially free up room for private enterprise, according to proponents.

If adopted, the shift would mark an acknowledgment that a policy "troika" that previously focused on investment, consumption and exports wouldn’t be enough to deliver the government’s ambitions for 2020.

For more visit: Bloomberg.com