The supply-side structural reform will inject new impetus to the growth of Chinese economy and generate benefits for everyone, said Hu Yuwei, research fellow with Chongyang Institute for Financial Studies, Renmin University of China (RDCY).
Hu made the remarks in an exclusive interview with Xinhuanet on March 3.
Supply-side structural reform has drawn wide attention at home and abroad as China moves to address the issues of excess capacity, massive property inventory, and "zombie" enterprises with poor profitability.
"China is now simultaneously dealing with the slowdown in economic growth, making difficult structural adjustments and absorbing the effects of previous economic stimulus," Hu said.
"But the effectiveness of traditional demand-side policy support wanes," Hu said, referring to the monetary and fiscal stimulus measures. Hence, "China finds a new way out by turning to the supply side to inject new impetus to the economy."
Reviewing the five major tasks of the supply-side reform, namely, cutting overcapacity and excess inventory, de-leveraging, reducing costs, and shoring up weak growth areas, Hu lays emphasis on the task of reducing costs, noting "costs cut can help enterprises maintain the competitive edge in the market".
Hu said tax reduction, further cutting red tape and delegating powers to lower levels, as well as fostering innovation are all key effective means to help enterprises become more competitive.
As for reducing overcapacity, Hu proposed three ways for the resettlement of superfluous workers influenced during the process.
Hu called for promoting mergers and reorganization rather than bankruptcy liquidation in dealing with "zombie" enterprises, building a social welfare network to protect these workers, as well as providing retraining for them and helping them find new jobs.
Hu also highlighted the importance of following the five concepts of innovation, coordination, green development, opening-up and sharing stressed in China's 13th Five-Year Plan during the implementation of the supply-side reform.
For example, with innovation, enterprises are able to produce high-end products that appeal to consumers, and with sound coordination, especially regional coordination, redundant construction will be avoided, Hu explained.
And the idea of achieving shared development facilitates the progress of employment, education, social welfare, poverty alleviation, etc., Hu added.
By closely following the ideas, the supply-side reform will be effective and beneficial to everyone in the society, Hu said.
