recently, the supply-side reform has been repeatedly mentioned by the national decision-making level. So, why does China's economy need supply-side reform? Where are the most likely points of supply-side reform during the 13 th Five-Year Plan period? Obviously, these problems deserve careful analysis.

■ Why does China's economy need supply-side reform?

The fundamental reason is that the current core issue of China's economy is still development, not short-term macro-control. Why do you say that? As a whole, China's economy still has great development potential. China's per capita GDP is only 2% of that of the developed economy, and China has a large number of unsatisfied basic needs and a large area of underdeveloped areas. As a big country's economy, China's economy should not encounter difficulties in the inter-provincial flow of substantial capital and labor factors. On the other hand, in economically developed areas, the gap between them and developed countries is still very large. Therefore, at present, especially during the 13th Five-Year Plan period, the fundamental task of China's economy is to find ways to increase the supply.

We can also talk about this problem from another angle. Although there is a problem of excess capacity in China's economy, the more fundamental problem is that our production side cannot provide many products that people need for various reasons. Examples abound. For example, China has 1 million people traveling abroad every year, and the average overseas shopping amount of each person is $5,. Many people go to neighboring countries to snap up products that China could have produced, which proves that many consumers' needs are not met by domestic supply.

All these indicate that China's economy is still facing a potential supply shortage, although the open shortage no longer exists. This requires us to work hard on the supply side and a group of enterprises to enter relevant fields as soon as possible to provide relevant products for the society.

■ What kind of supply-side reform does China need?

There are many supply-side reform tasks during the 13th Five-Year Plan period, which is also the potential of economic growth. From the general direction, three types of supply-side reforms are needed.

the first category is to accelerate the metabolism of the production side, eliminate backward production capacity and promote the entry of new production capacity. Take the iron and steel industry as an example. Although this industry has a production capacity of 1 trillion yuan, the production capacity is seriously surplus, but our production capacity is low-end, black and polluted. It is urgent for the government to take active measures, including subsidy policies, to speed up the elimination of a number of high-pollution and high-energy-consuming production capacity, especially some near Beijing, and some production capacity in the northeast, including Anshan, should also be phased out.

By eliminating this part of production capacity, the price of steel will rebound; Since then, the government has been able to establish a batch of modern new steel production capacity in coastal areas mainly relying on imported iron ore and coal through certain encouragement policies, thus ensuring clean and clean production. At present, the price of coal and iron ore in the international market is often half lower than that in China. If we can make better use of the international market, the profit of the steel industry can also be greatly improved. Placing heavy chemical industries such as steel in the coastal areas will also enable China to better implement the development strategies such as "One Belt, One Road". When the economies of India and other countries take off in the future, our modern steel mills can just sell a large number of products to these areas due to their insufficient infrastructure construction and industrialization capacity. In this way, a large number of cities in China will reproduce the blue sky and white clouds, because the biggest pollution source of urban air is the surrounding heavy chemical industry; At the same time, it can also close a large number of coal mines and iron mines with frequent accidents.

the focus of the second type of supply-side reform is to find ways to provide people with a large number of basic products and services that are still in short supply so far, most of which are public products. In this regard, the government must assume an unshirkable responsibility, and it must be highly clear that public products are mainly provided by the government. Specifically, a number of public infrastructure investment funds should be established in China, whose functions are similar to those of the World Bank. On the one hand, the government guarantees the issuance of relevant bonds, on the other hand, public products should be carefully selected based on social benefits. Sovereign debt guaranteed by China government is very popular in the world at present, which is also one of the most important strategic measures for RMB internationalization.

There is a growing demand in the fields of old-age care, education, health care and so on. The government should also try its best to relax access and provide corresponding preferential conditions to help potential investors enter these fields as soon as possible.

The focus of the third type of supply-side reform is to make good use of new technologies, especially Internet technologies, so as to improve the format of related industries. Internet brings not only new technology, but also a new production relationship. In the field of Internet, by directly connecting the two parties to the transaction, participants can be driven to rise rapidly or even exponentially. Take urban behavior as an example. With Internet tools, both parties can reach an agreement quickly, and passengers can easily know whether the driver has complained in the past, whether it is safe or not, without the need for taxi companies and other institutions to set up a complaint mechanism. In fact, this internet mechanism has formed a huge network similar to the "people's war", which has made the old management model that is difficult to change in the past suffer an unprecedented impact. The government should embrace this new internet technology as a driving force to transform related fields. If the taxi industry can be improved, it will bring more employment, more people's travel convenience and promote economic development. Similarly, in the field of Internet finance and other Internet services, the government should guide them with an experimental and open mind to help the market gradually form and improve.

In short, accelerating the supply-side reform will lead to a number of new growth points in China's economy during the 13th Five-Year Plan period, and the medium and high-speed economic growth will return to China.

(The writer is member Chinese People's Political Consultative Conference and director of the Center for China and World Economic Research in Tsinghua University)