Pressing Ahead With Supply-Side Structural Reform.docVIP

Pressing Ahead With Supply-Side Structural Reform 　　Since late November 2016， China’s Central Government has been dispatching task forces across the country to conduct random inspections on the reduction of steel and coal overcapacity. So far， big steel and coal producing provinces such as Shanxi， Shandong and Henan have already accomplished their reduction targets for the year ahead of schedule， a demonstration of achievements made in supply-side reform. 　　Over the past years， overcapacity， a high debt-toassets ratio in industrial enterprises， and high operation costs have become the biggest concerns toward the Chinese economy from the international community. To address these problems， the Chinese Government has deployed supply-side structural reforms featuring five major tasks―cutting overcapacity， destocking inventory， deleveraging， cutting costs and strengthening weak links in the economy. 　　As China starts implementing the 13th Five-year Plan（2016-20） in 2016， supply-side reform has become especially important， as it will directly impact efforts to realize the plan’s objectives. 　　To ensure solid implementation of the five tasks， the Chinese Government released an array of mandatory policies， including guidelines on how to cut excessive production capacity in steel and coal. The goal is to reduce coal and crude steel production capacity by 500 million tons and 100 million to 150 million tons， respectively， within the next three to five years. Furthermore， plans have been forged to cut operation costs in the real economy and to replace turnover tax with value-added tax， which will reduce tax paid by businesses by over 500 billion yuan （$72 billion） per year. Guidelines on reducing the leverage ratio for enterprises by mergers and reorganizations have been unveiled as well. 　　The active implementation of these compulsory documents has led to achievements in supply-side structural reform， which in turn helps to ease the international community’s nerves o