SCIO briefing on the 'new normal' in the Chinese economy and deepening supply-side structural reform

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Speaker:
Xu Shaoshi, minister of the National Development and Reform Commission (NDRC)

Chairperson:
Hu Kaihong, director-general of the Press Bureau, State Council Information Office

Date:
Jan. 10, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to the press conference held by the State Council Information Office. I believe you are interested in learning about how the Chinese economy and supply-side structural reform are faring. Therefore we have invited Mr. Xu Shaoshi, minister of the National Development and Reform Commission, who will brief us about the "new normal" of the Chinese economy and deepening supply-side structural reform. He will also answer your questions. Now, Mr. Xu, please.

Xu Shaoshi:

First, I want to thank you all for your interest in and support for China's development and reform. Today is January 10, I wish you a (belated) happy new year.

Today, I'll first briefly introduce to you the information regarding the "mass entrepreneurship and innovation" led by the work in streamlining administration and delegating power to lower levels as well as innovation-driven strategy. I will also talk about the supply-side structural reform in the last year as well as the years going forward during the 13th Five-year Plan period. I will then answer your questions.

The Chinese economy has slowed down during the past few years. GDP growth was 7.0 percent in the first quarter of 2015, 7.0 percent in the second quarter, 6.9 percent in the third quarter and 6.8 percent in the fourth quarter, showing a trend of slowing down. Therefore, in end of 2015 and the beginning of 2016, many people were pessimistic about the economy. Some institutions and scholars even said that the Chinese economy would "collapse" or have a hard landing. I responded to such predictions and concerns during the NPC & CPPCC meeting last year. I said then that the Chinese economy should be gauged by two aspects. First, the economy is in a state of "new normal," which means its growth rate is changing, its structure is improving and its growth momentum is shifting. Second, one will have different conclusions if one looks at trends in the Chinese economy. I said that we had confidence about the smooth running of the Chinese economy, just as we had the proper means and ability to keep it so. I said then the predictions about the collapse and the "inevitable" hard landing of the Chinese economy would turn out wrong. The past year has proved my words.

Last year, indeed, we faced extremely severe and complicated economic conditions both at home and abroad. We managed to adhere to the general work guideline of making progress while maintaining stability; taking the advancement of supply-side structural reform as the main thread; and comprehensively deepening reforms. It's fair to say China maintained steady and healthy economic and social development, and made a good start to the 13th Five-Year Plan (2016-2020).

Firstly, China's economy is performing within a reasonable range, and its industrial structure is constantly improving. GDP growth remained steady at 6.7 percent from Q1 to Q3. Economic growth for the whole of last year is expected to stay at about 6.7 percent. Over 13 million new jobs were created in urban areas. The CPI figure is to be released soon, with expectation of an approximately 2-percent mild growth for 2016. It has been a good harvest year, too. Total grain output reached 620 million tons, although the area of corn growing was reduced by 2 million hectares. The added value of the service sector accounted for as much as 52.8 percent of GDP, 13.3 percentage points higher than the figure for the secondary industry. Consumption contributed 71 percent of total economic growth, 13 percentage points higher than same period in the previous year. Energy consumption per unit of GDP fell by 5 percent, with emissions of major pollutants continuing to drop.

Secondly, supply-side reform is being promoted in an energetic yet orderly manner and the five tasks of cutting industrial capacity, reducing housing inventory, lowering the leverage level, cutting corporate costs and improving weak economic links have achieved preliminary effect. Since supply-side reform is a main thread for economic and social development during the 13th Five-Year Plan, I'll come back to this topic in more detail later.

Thirdly, the administrative reform of delegating power, strengthening regulation and improving service has been constantly deepened, and the vitality of market players further inspired. As far as we know, by the end of last year, the State Council eliminated about 620 matters previously subject to administrative approval by government departments. This has been accomplished in advance of target by cancelling one-third of such matters. We have revised the Catalogue of Investment Projects three times, with a 90-percent reduction of investment projects subject to government administrative confirmation. Over 97 percent of merchandise and services now adopt a market-regulated price. Meanwhile, we have deepened the reform of the business system by integrating the business license, the organization code certificate, and the certificate of taxation registration, social insurance registration certificate and statistical registration certificate into one document, and assigning a unified social credit code to it. The pilot reform of the issuance of certificates and licenses by different administrative departments has shown obvious effect in stimulating market vitality, increasing employment and cleaning market environment.

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