Page 24 - 2017 White Paper
P. 24
7 White Paper on the Business Environment in China
Also in May 2016, the Wall Street Journal cited the State Council statement released in November, Xinhua
People’s Daily as reporting that President Xi Jinping reported. Since the revised central government pricing
had called for the Communist Party to “resolutely push catalogue became effective in January, the number of
forward supply-side structural reform”. The Journal items subject to price controls had been reduced by 80
observed that the current system of centralized political percent, thus the market, rather than the government,
control in order to drive more free-market reform may be is now playing a greater role in the Chinese economy.
perceived as a “paradox”. It seems clear that China needs Having hailed these accomplishments, Xinhua also
its particular brand of supply-side reforms, the Journal admitted that “more efforts are needed” to advance
concludes – what may not be so clear at this point is if greater structural supply-side reforms. It warned that
China will succeed (The Wall Street Journal 2016). financial stability should be given “the dominant
attention”, adding that only then could supply-side
Midway through 2016, the South China Morning Post structural reform in the Chinese economy achieve “a
seemed to agree and opined that “supply-side reform” complete success” (Xinhua 2016b).
still remains largely a buzzword with little progress made
on the ground, adding that the authorities had not taken To sum up: in China, while the language of supply-
any tough or decisive steps to implement the reforms. side economics is utilized to justify a more centralized
The Post mentioned industry experts as saying that the planning of the economy, it is clear that President
lack of clarity in targets and the methods for reform have Xi Jinping’s structural supply-side reform is indeed
hindered progress (Xie 2016). intended to help solve the country’s overcapacity in
core industries. The phrase has been widely discussed
As if in response to the Post critique, halfway through and written about, but it remains to be seen how
2016, in July, President Xi Jinping again urged further extensively it will be implemented and how quickly (or
progress on supply-side structural reforms as the how long) it will take to implement. What is clear is that
Communist Party’s decision-making Politburo discussed it is important for foreign investors active in China to
economic policies for the second half of the year, the track its implementation and monitor the government’s
South China Morning Post reported. The president also approaches to reduce core industrial capacity carefully,
met with non-party experts on economic development as these could have significant impact on China’s
and said a package of policies was needed to “expedite fiscal resources and foreign trade policies. What is also
supply-side structural reforms”. Economic observers said, important to consider would be the range of possible
the Post noted, that the president’s remarks signalled his negative impacts and growth opportunities these
“firm stance” on continuing to push forward supply-side structural supply-side reforms could pose for foreign
reforms (Zhang 2016). investors’ China business activities and operations.
By October 2016, an Asia Times article reported that Background
Chinese consumer prices rose at their fastest pace in
four months in September with the headline CPI figure In order to manage China’s ongoing economic
bouncing back to 1.9 percent, a level last seen in May, transition and in preparation to launch the 13th Five
beating analysts’ expectations of 1.6 percent. Producer Year Plan, details of which are scheduled to be released
prices also rose 0.1 percent, turning positive for the first in March 2016, President Xi Jinping, in late December
time in almost five years. The report concluded that 2015, revealed his administration’s strategic framework
these figures indicated Beijing’s supply-side reforms in leading the transition. According to a report in China
were finally gaining traction after nearly a year (Wang Daily, when speaking at the end of the Central Economic
2016). Work Conference, President Xi announced that China
will be focusing on “supply-side reform, or a package of
By December 2016, Xinhua dutifully reported that supply-side policies to release new demand and boost
“significant progress” in structural supply-side reform new productivity” (Chen 2015).
had been accomplished in the past year. As an example,
Xinhua cited one of the five major tasks for 2016 - If the terminology has a ring of familiarity, then
reducing overcapacity – as experiencing “satisfactory the reader was probably around during the 1980s,
outcomes”. China had “basically” achieved this year’s when supply-side policies, popularly known then as
steel and coal capacity reduction goals, according to a
24
Also in May 2016, the Wall Street Journal cited the State Council statement released in November, Xinhua
People’s Daily as reporting that President Xi Jinping reported. Since the revised central government pricing
had called for the Communist Party to “resolutely push catalogue became effective in January, the number of
forward supply-side structural reform”. The Journal items subject to price controls had been reduced by 80
observed that the current system of centralized political percent, thus the market, rather than the government,
control in order to drive more free-market reform may be is now playing a greater role in the Chinese economy.
perceived as a “paradox”. It seems clear that China needs Having hailed these accomplishments, Xinhua also
its particular brand of supply-side reforms, the Journal admitted that “more efforts are needed” to advance
concludes – what may not be so clear at this point is if greater structural supply-side reforms. It warned that
China will succeed (The Wall Street Journal 2016). financial stability should be given “the dominant
attention”, adding that only then could supply-side
Midway through 2016, the South China Morning Post structural reform in the Chinese economy achieve “a
seemed to agree and opined that “supply-side reform” complete success” (Xinhua 2016b).
still remains largely a buzzword with little progress made
on the ground, adding that the authorities had not taken To sum up: in China, while the language of supply-
any tough or decisive steps to implement the reforms. side economics is utilized to justify a more centralized
The Post mentioned industry experts as saying that the planning of the economy, it is clear that President
lack of clarity in targets and the methods for reform have Xi Jinping’s structural supply-side reform is indeed
hindered progress (Xie 2016). intended to help solve the country’s overcapacity in
core industries. The phrase has been widely discussed
As if in response to the Post critique, halfway through and written about, but it remains to be seen how
2016, in July, President Xi Jinping again urged further extensively it will be implemented and how quickly (or
progress on supply-side structural reforms as the how long) it will take to implement. What is clear is that
Communist Party’s decision-making Politburo discussed it is important for foreign investors active in China to
economic policies for the second half of the year, the track its implementation and monitor the government’s
South China Morning Post reported. The president also approaches to reduce core industrial capacity carefully,
met with non-party experts on economic development as these could have significant impact on China’s
and said a package of policies was needed to “expedite fiscal resources and foreign trade policies. What is also
supply-side structural reforms”. Economic observers said, important to consider would be the range of possible
the Post noted, that the president’s remarks signalled his negative impacts and growth opportunities these
“firm stance” on continuing to push forward supply-side structural supply-side reforms could pose for foreign
reforms (Zhang 2016). investors’ China business activities and operations.
By October 2016, an Asia Times article reported that Background
Chinese consumer prices rose at their fastest pace in
four months in September with the headline CPI figure In order to manage China’s ongoing economic
bouncing back to 1.9 percent, a level last seen in May, transition and in preparation to launch the 13th Five
beating analysts’ expectations of 1.6 percent. Producer Year Plan, details of which are scheduled to be released
prices also rose 0.1 percent, turning positive for the first in March 2016, President Xi Jinping, in late December
time in almost five years. The report concluded that 2015, revealed his administration’s strategic framework
these figures indicated Beijing’s supply-side reforms in leading the transition. According to a report in China
were finally gaining traction after nearly a year (Wang Daily, when speaking at the end of the Central Economic
2016). Work Conference, President Xi announced that China
will be focusing on “supply-side reform, or a package of
By December 2016, Xinhua dutifully reported that supply-side policies to release new demand and boost
“significant progress” in structural supply-side reform new productivity” (Chen 2015).
had been accomplished in the past year. As an example,
Xinhua cited one of the five major tasks for 2016 - If the terminology has a ring of familiarity, then
reducing overcapacity – as experiencing “satisfactory the reader was probably around during the 1980s,
outcomes”. China had “basically” achieved this year’s when supply-side policies, popularly known then as
steel and coal capacity reduction goals, according to a
24
