Supply-side reform to remove excess capacity and grow strategic emerging industries

Zhang Xiaoqiang, Former Deputy Director of China’s National Development and Reform Commission, said in an interview that the supply-side reform currently proposed by the State aims not only to cut down on excess capacity but to meet other demands as well. As outlined in China’s 13th Five-year Plan, added value from strategic emerging industries shall contribute to 15% of the country’s GDP, one of the requirements of supply-side reform.

As China’s economy slows, traditional industries face a number of challenges, such as higher energy consumption, pollution, overcapacity and rising labor costs. In this context, the growth of strategic emerging industries will outpace that of traditional industries by 4-6 percentage points.

Under the 13th five-year plan, China shall prioritize energy-saving and bio-friendly technologies, information technology, high-end equipment manufacturing, new materials and new-energy vehicles. Chinese enterprises are expected to increasingly invest in the development of new products and technologies. The government meanwhile is expected to encourage innovation through financial support and preferential policies.

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