The Supply Side Reform Should Be That The Leverage Ratio Of The System Reform Has Exceeded The Warning Line.

The supply side reform is often misunderstood as the structural adjustment of the supply side. The structural adjustment of the supply side has actually returned to the old way, that is, administrative power is used to adjust the structure.

I am very worried that this approach may not achieve the desired results.

Worry about supply side reform become administrative power adjustment structure worry about supply side reform become administrative power adjustment structure

My topic is about accelerating the pformation of the mode of economic development.

I would like to make 4 points.

The first point is that in November this year, the Central Committee of the Communist Party of China put forward efforts to promote structural reforms on the supply side and promote sustained and healthy economic development.

This decision is a very important decision. The introduction of this decision means that we have shifted from the original Keynes - based stimulus policy to a macro - economic policy to improve the quality of supply and improve the quality of development.

This is an important change in the thinking of the leadership.

The main idea of the past is to analyze the reasons for the decline of China's economic growth and find a solution to the problem by analyzing the demand side.

The conclusion from this analysis is that the reason for the economic slowdown is that the power of investment, consumption and export of the three wagons is insufficient, so the strategy is to expand demand and maintain growth.

But after implementing this policy for a number of years, we are now in a predicament, and there are two phenomena.

The first phenomenon is diminishing returns on investment.

Over the years, the intensity of stimulus has not diminished every year, but efficiency has been declining, and it has little effect.

The other is increasing leverage.

Last year, we should say that we have exceeded the warning line, and we are continuing to raise it now, so that there is a risk of systemic risk.

In fact, we can no longer continue to use this approach to deal with the challenges we face.

So this decision is very important. For many years, western economists have suggested that when analyzing the long-term economic development of China, we should not use the demand side analysis. Keynes's stimulus policy is ineffective for the medium and long term development, and has many disadvantages.

Second, what conclusions can be drawn from the analysis of demand side? The total amount of GDP, the total demand and the number of production factors are equal.

But when you want to analyze the total change of GDP, you can analyze it from the demand side or from the supply side.

The supply side factor is mainly from the growth of new capital investment, total factor productivity and so on.

What is the conclusion from this analysis? The first is the economic oscillation. Why do we have economic growth? Because several factors on the supply side are weakening, one is the disappearance of the demographic dividend, one is the increase in investment is difficult to sustain, and the potential growth rate is falling.

The prescription to solve this shock is to mobilize enthusiasm by correcting the misallocation of resources, changing the deterioration of structure and establishing compatible incentive mechanisms.

We should try our best to improve the allocation effect of resources and the operation effect of macroeconomy.

The so-called improvement of resource allocation efficiency and economic efficiency is actually changing the way of economic development.

Changing the mode of economic growth means changing the growth that depends mainly on investment and turning to the growth that is mainly achieved by efficiency improvement.

Therefore, the core and essence of the problem is to accelerate the pformation of the way of economic development.

Third, the key to speed up the pformation of the mode of economic development is whether we can eliminate the institutional obstacles to achieve pformation through comprehensive deepening reform.

It has been 20 years since the formal pformation of the mode of economic development was put forward. It was put forward when the 95 plan was formulated in 1995, but until now, the pformation has not yet been fully realized.

10 years after the proposed pformation of economic development, the 2005-2006 year plan for 11th Five-Year was discussed. Why did it progress so slowly? At that time, the conclusion was that there were institutional obstacles.

I wrote "China" at that time.

"Decision making", which explained in detail the institutional obstacles at that time, concluded that the government played a leading role in the allocation of resources, so that the role of the market can not be brought into full play.

This problem has not been solved until now. How can we solve this problem? That is, we need to deepen the reform in an all-round way, eliminate the institutional and institutional barriers to these pformation with comprehensive deepening reform, give full play to the role of the market, give full play to the role of the effective allocation of resources in the market, and bring into play the role of the market in the effective administrative incentive mechanism to realize the pformation.

Fourth, from three months to the implementation of the central decision, two problems are urgently needed to be solved.

The first question is whether to improve the quality of economic development depends mainly on market forces or mainly on administrative means. This is a big problem.

In theory, most people agree that market forces can promote resources from oversupply, inefficient enterprises to higher efficiency enterprises, and make decision optimization. It also recognizes that the market can effectively stimulate the vitality of innovation and entrepreneurship, and achieve the goal of rewarding rewards and punishing the poor.

But establishing and perfecting the market mechanism is not easy to do, and it is necessary for the relevant organizations and personnel to give up all the existing powers and interests.

Therefore, for government agencies and officials, the best way is to intervene by administrative means.

On the one hand, we should target the excess capacity of the index, eliminate the inventory of real estate, demand the network to increase the speed and reduce the cost, and on the other hand, we should set up various supporting funds and high and new technology development zones in an attempt to introduce a high tide of technological innovation with high investment and high subsidies.

But experience in recent years has proved that optimizing the structure must optimize the system and mechanism, and assist the necessary administrative means.

It is difficult to achieve structural success by relying mainly on administrative means.

Speaking of this place, I think a concept needs to be clarified, that is, structural reform is rarely used in the economic literature of China, but there are some people in the west, especially those in the West.

I like to use this term very much. After the financial crisis, some international organizations pushed for structural reform in European countries.

I checked some documents. At that time, the structural reform was about the reform of the political, social and economic structure, that is, the structural reform we talked about.

But when combined with our supply side, it is often understood as the structural adjustment of the supply side. Now we can see many reports. The structural adjustment of the supply side has actually returned to the old way, that is, using administrative power to adjust the structure.

I am very worried that this approach may not achieve the desired results.

Another area that needs our attention and improvement is

The executive departments seem a bit slow.

The third plenary session has done a good top-level design for comprehensively deepening the reform, and many reform projects have been approved by the Central Committee for deep reform.

But there seems to be a problem with the convergence of these top-level design and guidance and specific implementation plans.

There are some guiding opinions and programmes that do not match up. The people in the power sector have made some discussions, which is obvious.

In the past month, the so-called reform is idle, leading departments are busy issuing documents, the lower level departments are busy learning documents, and a document has not been finished yet, and the second documents have come again, called reform or idling, or reform has become rhetoric.

This criticism may be false, but it should arouse our vigilance.

We must put these good reforms in the top-level design and guidance to take root and move to the general secretary Xi Jinping's January 12th central reform and reform committee. This year, we strive to build up the new framework of the main body, which will help deepen the reform of the objectives, implement the links, and make every reform possible.

I hope, or I suggest, that the leading departments and the executive departments should cooperate fully and reform one by one, discuss its progress, whether its original design is deficient or not, and what supplements we have in the process of implementation.