One of China’s leading economists and politicians has called for supply-side structural reforms to do away with the “traditional” mentality of the country’s former planned economy.
Lou Jiwei, current chair of the National Council for Social Security Fund and formerly the Chinese Minister of Finance, said during a speech before the Chinese People’s Political Consultative Conference (CPPCC) that supply side structural reforms were indispensable to China achieving “high-quality growth.”
Lou noted that “the three removals, the one reduction and the one supplementation” (三去一降一补) lie at the core of supply side structural reforms, which encompass factors of production such as labour, land, capital and innovation.
“Supply-side structural reforms refers to the removal of systemic impediments, thus achieving systemic adjustments that optimise the allocation of factors of production.
“For this reason, during the process of the ‘three removals, the one reduction and the one supplementation,’ if we primarily rely on administrative orders and government initiative, this is just another version of the planned economy’s ‘closure and updating,’ and isn’t reform.”
Lou also said that deleveraging remained one of the most difficult parts of the reform process, given that the handling of financial risk is currently one of China’s most urgent tasks.