BEIJING — China’s latest efforts to stimulate its economy by deepening structural reform will produce rich “dividends” shared within China’s borders and across the world.
While the effectiveness of traditional demand-side policy support lessens, the country is now turning to the other side for new growth vitality.
At a recently concluded key economic meeting in Beijing, the government pledged to take steps to push forward “supply-side structural reform” in 2016 and beyond to support growth through new demand and productivity.
Exploring new ways in path of structural reform
Actually, the country, with a steadfast stance and strong confidence in its path of structural reform, has never ceased its efforts in exploring new sources of growth.
At the Central Economic Work Conference, which was held from Dec 18 to 21, Chinese leaders reviewed the country’s economic performance in 2015 and mapped out plans for 2016.
According to an official statement released after the meeting, the government will make fiscal policy more forceful and monetary policy more flexible to keep growth within a proper range in 2016, with an emphasis on structural reforms.
“Chinese leaders approved an economic blueprint for next year that emphasizes tackling long-term problems and reflects a realization that debt and investment can no longer power the world’s second-largest economy,” said The Wall Street Journal on Dec 22.
The supply-side reform, aimed at removing regulatory barriers and giving the market a bigger say in resources allocation, will be a stepping stone for China to achieve its structural reforms during the 13th Five-year Plan period (2016-2020).
Analysts believed the reform will not only pay big dividends for the country, but also have a significant impact on the rest of the world.
“China’s supply-side reform will be new drivers of growth, and China’s economy will continue to evolve,” said Brendan Ahern, chief investment officer of Krane Funds Advisors.
Professor Garth Shelton, a lecturer at the University of Witwatersrand in Johannesburg, said that, from a long-term point of view, China can maintain its economic growth, which will make significant contribution to world economic development.
After more than three decades of rapid economic expansion, the Chinese economy has now entered a new phase, which is featured by a relatively steady growth rate and a transition from manufacturing-driven structure to service-driven mode, said Shelton.
With ever increasing trade and financial ties with other countries, China’s economy will still be the engine of world economic growth, he said.
High quality two-way opening-up
Beside the reform drives, China’s opening-up policy is also arresting increasing attention. At the economic work meeting, the government stressed the need to make more efforts in promoting high-quality two-way opening-up.
In an earlier guideline on opening the economy wider to the outside world, the government also pledged to continue to improve foreign capital management, encourage outbound investment, stabilize foreign trade and explore global cooperation.
Zhang Yansheng, secretary-general of the academic committee of the National Development and Reform Commission, said China wanted to create a stable, open and transparent business environment to attract more capital, talent and technology and speed up restructuring.
Meanwhile, the guideline said, the government will boost outbound investment.
Companies will be encouraged to invest in infrastructure, energy and resources around the world, while advantageous industries including high-speed rail, nuclear power, aviation and machinery will be promoted globally.
Shelton said that, with ever increasing trade and financial ties with other countries, China’s economy will still be the engine of world economic growth.
The professor believed China’s continued economic opening-up and reform will bring major trade opportunities to Africa, and China, with a growing middle class, will become an important export market of the continent.
Many other analysts believed that the world will receive even bigger “dividends” brought about by China’s reform and opening-up in the year 2016, when the Asian Infrastructure Investment Bank will start to fund projects, the implementation of the Belt and Road Initiative will continue and the Silk Road Fund will become more and more active.
Those initiatives will benefit the world, particularly the countries along the routes, they said.