The rapid growth witnessed by the Chinese economy during the last 30 years had capital investment, exports and consumption as its focus areas, which are all generally considered demand-side parameters. For example, in 2008, following the sub-prime crisis in the US, China announced a 4 trillion yuan stimulus package to increase investment in infrastructure projects, and thereby create jobs and stimulate demand for materials used in construction. The rationale behind such a package also included a thought that wages paid to workers in newly created jobs would be spent on essentials and business would flourish.
In the process, however, issues such as income distribution, rising home prices, and overcapacity were not paid attention.
By focusing on supply-side, which means stimulating economic growth through reducing barriers to production especially through tax cuts, wealth owners will be enticed to invest in things that increase supply. These may be in the form of launching new businesses or innovative goods and services. This will generate sustainable, quality growth, according to some analysts.
Currently, China's growth rate has fallen below seven per cent and the economy is no longer marching ahead on the demand-side parameters of investment, exports and consumption. Even changes in banking regulations and interest rates have not worked in favour of increasing investment or consumption.
In tune with President Xi Jinping's view that China should work more on the supply side “while moderately expanding overall demand”, the Central Economic Work Conference held in December 2015 explained that supply-side structural reform aims at cutting capacity, increasing productivity, nurturing new industries and improving the mobility of people.
The supply-side reforms implemented by China so far include abandoning the one-child policy and steps taken to cut housing inventories, reduce business costs, streamline bureaucracy, tackle debt overhang, and eliminate superfluous industrial capacity. These steps are expected to lead to lower prices and consequently boost consumption. (RKS)
Fibre2Fashion News Desk – China
Textiles | On 28th Apr 2017
Uniform levy of 5 per cent Goods and Services Tax (GST) on all...
Textiles | On 28th Apr 2017
The countervailing duty (CVD) that was imposed on Nepali jute...
Fashion | On 28th Apr 2017
The easiest way to go out of business is to be too big or expand too...
Vidhyaa Shankar. S
A Ganapathi Chettiar
'The usage of knits is getting into the boundaries of woven fabrics'
Bridalwear is not about reds and whites anymore
Fashion shows are also encouraging and highlighting sustainable fashion
Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...
About one in every 20 patients picks up an infection while hospitalised....
Biovation II LLC
Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...
Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...
Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...
Yash P. Kotak
Bombay Hemp Company
One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...