Why is the 13th Five-Year Plan period crucial for the structural reform?

First of all, economic transformation faces obstruction from a variety of structural problems. An outstanding example of such an issue is that the current structures of supply and demand don't complement each other. The demand's role in guiding the supply has not been developed to its full, and at the same time, the supply has not met demand effectively. Therefore, while expanding the total demand appropriately, the government should intensify the supply-side reform in order to improve the quality and efficiency of the supply system.

Second, there are serious structural problems between consumption and investment. Since the 12th Five-Year Plan (2011-15) period, the imbalance between the two has been improved, with consumption's contribution to GDP rising. However, since the investment-driven growth pattern hasn't been fundamentally changed, those two factors have yet to find equilibrium. Also, problems featuring inadequate supplies to bolster consumption have become increasingly prominent.

Third, there are inherent issues in the policy being made and the institutions driving them forward. To alleviate the economic stresses, we shouldn't rely solely on policy stimulus, but on institutional arrangement and innovation, too. For instance, stimulus policies, especially macro financial control measures, should be the last resort to prevent systemic risks by cutting excessive capacity. Institutional problems causing surplus capacity should be eliminated through a change in the administrative approval system, a market-oriented adaptation to production factors, the improvement of the taxation system and the revision of the financial system.

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