3rd Dec 2023


China's supply-side structural reforms bring new opportunities to the world

  • According to the IMF, China contributes over 25 percent of global growth, a figure that surpasses the United States. (Photo: Daniel Foster)

After decades of rapid growth, the Chinese economy is currently shifting from high speed to medium-to-high speed growth – this is what has been coined the 'new normal'.

Reflecting important changes to China's economic structure, the new normal emphasises quality and efficiency in lieu of scale and speed, and innovation in lieu of investment in production factors. This is a necessary stage of China's economic development, a process of optimisation, adjustment, transformation and promotion.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Adapting to this new reality requires tackling a number of challenges. Externally, the global economy suffers from weak growth and demand is insufficient. Internally, potential growth has dropped as demographic dividends reduced, capital gains decreased and natural resources become scarce.

This has led to a number of challenges, such as accumulated structural, institutional and qualitative problems.

The problems include the fall of economic growth and industrial prices, the decline of corporate profits, the shrinkage of revenue growth and the increase of economic risks.

Although a strong stimulus policy could increase economic growth in the short-term, it is unable to raise potential growth rate, not to mention it may also result in a huge waste of resources.

Supply-side structural reforms

Since November 2015, the Chinese government has been implementing supply-side structural reforms to improve total-factor productivity, further release reform dividends, offset downward economic pressure, better meet the needs of the masses, and promote sustained and sound economic and social development.

This is an inevitable choice, reflecting needed adjustments to the current economic situation.

The supply-side structural reforms aim to deliver five key tasks: 1) reduce overcapacity, 2) reduce inventories, 3) de-leverage, 4) lower costs and 5) shore up weak growth areas. These five tasks are interconnected and mutually reinforcing.

To tackle overcapacity, the focus is on increasing mergers and decreasing bankruptcy and liquidation. To reduce stockpiles, the starting point is to fulfil the housing demand of new urban residents. De-leveraging involves resolutely stopping systemic and regional risks. To lower costs, comprehensive measures are put in place, including systemic transaction costs and cutting tax burdens for enterprises. To shore up weak growth areas, effective supply is being enhanced through poverty alleviation, cultivating newly emerging industries, etc.

China's supply-side structural reforms will have non-negligible impacts on Chinese society. But restructuring is inevitable to fully transform China's development mode.

China is confident and capable in coping with such challenges and indicators continue to forecast long-term growth.

Unlocking China's economic potential

Firstly, China's economy is characterised by its strong inner support. China's comprehensive industrial system has endowed the country with solid material foundations. China boasts huge potential in market demand and is consistently growing and modernising. This is matched with considerable space for regional development. China has accumulated experience in macro-economic control and is now able to cope with international and internal risks to ensure economic stability.

Secondly, economic transformation is accelerating and structural optimisation has already yielded positive results. Consumption contributed 66.4 percent to economic growth in 2015, which was more than investment. The service sector accounted for 50.5 percent of GDP, surpassing the industry sector.

Thirdly, China's economic growth is gaining speed, and the new economic momentum is building up. New industries such as hybrid or electric cars, robots and mobile internet are booming. The "Belt and Road" initiative and international cooperation on productivity and equipment manufacturing have significantly expanded the space for economic development.

Building on these achievements, China will continue to implement supply-side structural reforms to pursue its new normal course and further unlock the country's economic potential.

Sustainable development is a key objective for China to bypass the "middle income trap".

China's supply-side structural reforms will also contribute to the stable recovery of the global economy in the post-crisis era. China is not a drain on the global economy, but instead a major driving force.

In 2015, China enjoyed 6.9 percent economic growth, remaining among the world's best performers. China's total imports still ranked second in the world and outward direct investment was up 10 percent over the previous year.

According to statistics from the International Monetary Fund (IMF), China contributes over 25 percent of global growth, a figure that surpasses the United States.

The source of this achievement is the acceleration of economic transformation and building up of new economic momentum.

As supply-side structural reforms proceed, the economic development of China can substantially contribute to driving the global economy out of its current downturn.

China and the EU

Both China and the European Union are major economies who account for one third of the global GDP.

China plays an important role for the common development and prosperity of the world and shares the same goals of pursuing structural reforms and promoting economic growth.

In 2015, China and the EU maintained the largest trading partner relationship, enlarged mutual investment, and expanded pragmatic cooperation. Synergies between the "Belt and Road" initiative and the European development strategy for a larger Eurasian market were established.

Under the framework of international cooperation, such as the IMF and G20, China and the EU pushed forward global macro policy's communication and coordination and improved international rules and mechanisms.

There is a bright future for China and the EU working together towards the recovery of the world economy.


This article is sponsored by a third party. All opinions in this article reflect the views of the author and not of EUobserver.

China is making good stories not bad ones

China has been reforming, improving and transforming, making "good stories" for the benefit of its 1.3 billion people and the common good of humanity.

Divided EU debates China market economy status

The EU Commission will, on Wednesday, debate the sensitive issue of China “market economy status,” with nerves jangling in European industry over cheap Chinese goods.

Latest News

  1. Israel's EU ambassador: 'No clean way to do this operation'
  2. Brussels denies having no 'concern' on Spain's amnesty law
  3. Dubai's COP28 — a view from the ground
  4. Germany moves to criminalise NGO search-and-rescue missions
  5. Israel recalls ambassador to Spain in new diplomatic spat
  6. Migrant return bill 'obstructed' as EU states mull new position
  7. Paris and Berlin key to including rape in gender-violence directive
  8. What are the big money debates at COP28 UN climate summit?

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us