





The coming year of 2016 is not only the first year of the decisive stage of building a well-off society in an all-round way, but also the crucial year of promoting supply-side structural reform. Under the leadership of the CPC Central Committee with the Supreme Leader as the core, China’s economy actively adapts to and leads the new normal, various reform measures are solidly promoted, the mode of economic development is constantly changing, and the economic structure is increasingly optimized, achieving a good start in the Thirteenth Five-Year Plan. Taking stock, these achievements are condensed in one major event worth remembering.
1 China’s economy is stable and improving.
[Event] In the first three quarters of 2016, China’s GDP maintained a growth rate of 6.7%. Looking at the whole year, China’s economy is expected to achieve a medium-to-high-speed growth level of about 6.7% in 2016, showing a general trend of slowing down and stabilizing, stabilizing the middle and improving, and making progress while stabilizing.
[Comment] The performance of "stable to good" made China’s economic characteristics of good resilience, sufficient potential and large room for manoeuvre further manifest in 2016. The overall economic performance of China in 2016 conforms to the basic characteristics of speed change, structural optimization and power conversion under the new normal of economic development, which provides a good macroeconomic environment and conditions for improving the quality of economic growth, promoting economic structural optimization and promoting energy conservation and emission reduction.
Hu Angang, president of Tsinghua University Institute of National Studies, pointed out that from the international comparison, China still belongs to one of the countries with the highest economic growth rate in the world, and its economic growth rate of around 6.7% is obviously higher than that of the United States, Japan and the European Union. At the same time, China’s total economic output has exceeded $10 trillion. For every 1 percentage point increase on this base, the GDP will exceed $100 billion, which is equivalent to the 1.8 percentage point increase of economic growth in 2010. From this perspective, in 2016, China created a dazzling economic growth highlight in the depressed world economic environment.
2 Supply-side reform has achieved results
[Event] The task of de-capacity of steel and coal was completed ahead of schedule, the area of commercial housing for sale continued to decline, and the asset-liability ratio of industrial enterprises above designated size declined. In the first 10 months, the cost per 100 yuan of main business income of industrial enterprises above designated size decreased by 0.24 yuan year-on-year, and the investment in the central budget was tilted towards poverty alleviation, infrastructure and industrial upgrading … … Over the past year, the five major tasks of supply-side reform have been comprehensively pushed forward and achieved initial results.
[Comment] The action of supply-side structural reform is real, and the results of "three to one, one reduction and one supplement" in some areas exceeded expectations. On the whole, the initial progress made in the five major tasks has brought positive factors such as increased positive changes in production and demand, obvious improvement in market expectations, steady growth in investment, and continuous improvement in corporate efficiency, which has laid a good start for the next reform.
Hong Kong Ta Kung Pao article pointed out that compared with the "troika" of investment, consumption and export on the demand side, the supply side includes four elements: labor, land, capital and innovation. The supply-side structural reform in China aims at adjusting the economic structure, optimizing the allocation of factors and improving the quality and quantity of economic growth.
3 "camp reform" has been fully promoted.
[Event] Since May 1, 2016, China has comprehensively pushed forward the pilot project of changing business tax into value-added tax nationwide, including the construction industry, real estate industry, financial industry and life service industry. The data shows that from January to November, the cumulative tax reduction from the reform of the camp was 469.9 billion yuan, and the total tax reduction scale for the whole year will exceed 500 billion yuan. Many enterprises will get a real "red envelope" from it.
[Comment] The "camp reform" is a major strategic deployment made by the Central Committee of the Communist Party of China and the State Council with a view to the overall development of the country, and it is also an important measure for China to implement structural tax reduction under the new normal of economic development.
Zhang Lianqi, a member of Chinese People’s Political Consultative Conference, believes that the "camp reform" pilot is a tough battle. On the one hand, this reform has given full play to the tax reduction effect and improved the VAT deduction mechanism, on the other hand, it has also improved the financial environment of the market. In the supply-side structural reform, it is particularly important for enterprises to reduce their burdens, and the "reform of the camp" has played a positive role in reducing taxes and fees, stimulating vitality and cultivating the tax base. In an environment where risks are controllable and the system is fair, improving the specific measures of "reform of the camp" will lay a solid foundation for further reducing the burden on enterprises in 2017.
4 G20 delivers "China Plan"
[Event] From September 4th to 5th, 2016, the 11th Summit of G20 leaders was held in Hangzhou, China. In view of the current challenges facing the world economy, a series of countermeasures such as "strengthening macro-policy coordination" and "innovating development mode" put forward by China at this summit have been widely affirmed by all walks of life at home and abroad. The "China Plan" is increasingly popular among the people.
[Comment] In the era of economic globalization, the economies of all countries tend to be prosperous and lose. Only through cooperation can we achieve common development. Therefore, making the world economy more inclusive and achieving a win-win situation for all countries is both a moral responsibility and an immeasurable effective demand.
Neil Renwick, a professor at Coventry University in the United Kingdom, commented that thanks to China’s efforts, the G20 Summit brought key issues such as sustainable development to the core of international politics, and set specific goals to promote all parties to take practical actions to implement important global agreements. It can be said that through this summit, China has laid the foundation for more meaningful international actions, which no other G20 presidency has done before.
5 The reform of state-owned enterprises is deepening
[Event] Since 2016, the "four beams and eight pillars" of state-owned enterprise reform have sprung up, the "1+N" document system of state-owned enterprise reform has been completed, and the "ten reform pilots" have been fully rolled out, and positive progress has been made in slimming and improving health, improving quality and efficiency, reorganizing and integrating central enterprises, reorganizing and establishing investment and operation companies, innovating and developing, strictly supervising the transfer of SASAC and strengthening the party building of central enterprises.
[Comment] The reform of state-owned enterprises is not simply achieved through some institutional adjustments or administrative measures, but is more driven by market players and follows market rules. This will undoubtedly help to change the past problems such as "fuzzy subject, administrative subject and absence of subject", strengthen efficient assets, revitalize inefficient assets and eliminate invalid assets, so that state-owned enterprises can better serve China’s economy.
Liu Rui, a professor at the School of Economics of Renmin University of China, believes that the reform of state-owned enterprises has now entered the implementation stage, and the details of policies have been discovered in the pilot, and some supplements and improvements have been made to ensure that the reform of state-owned enterprises will not go astray, and at the same time, it also responds to social concerns. Of course, the reform of state-owned enterprises is a very complicated reform, which requires both top-level design and bottom-line thinking, and requires caution.
6 the free trade zone continues to expand.
[Event] In August 2016, China decided to establish seven new pilot free trade zones in Liaoning Province, Zhejiang Province, Henan Province, Hubei Province, Chongqing City, Sichuan Province and Shaanxi Province on the basis of the successful construction of pilot free trade zones in Shanghai, Guangdong, Tianjin and Fujian.
[Comment] The purpose of setting up a free trade zone in China is to try a legal, international and market-oriented business environment construction path and operation mode by setting up a free trade zone, and create an experimental field for an open economic system; The second is to build a typical free trade zone that is in line with international standards, free trade, convenient investment and financial liberalization; The third is to form an open economic model that can be popularized and replicated; Fourth, drive the development of the surrounding economy and make it a new growth point of China economy.
Tong Jiadong, vice president of Nankai University, believes that from the practice in the past few years, the goal of setting up a free trade zone in China has been initially achieved, and many bold explorations have been made in the construction of institutional mechanisms, which have achieved results in some fields. The birth of the third batch of pilot free trade zones not only reflects China’s clear orientation of adhering to reform and opening up, but also fully shows that China’s implementation of the free trade pilot zone strategy is completely in line with its own economic development reality.
7 RMB "into the basket"
[Event] Since October 1, 2016, the RMB has been officially included in the Special Drawing Rights (SDR) currency basket of the International Monetary Fund and has become one of the official reserve currencies of the International Monetary Fund.
[Comment] SDR is an important international reserve asset to make up for the shortage of official reserves of member countries. Before "entering the basket", the RMB was just the currency of China in a sense. RMB joining SDR means that central banks and many international institutions will actively or automatically increase their holdings of RMB assets as foreign exchange reserves. In the long run, this means that the RMB has been further recognized internationally.
Siddharth Tiwari, director of the Strategy, Policy and Review Department of the International Monetary Fund, believes that the entry of RMB into the basket is an important milestone for China to integrate into the global financial market, and it is also the world’s recognition of China’s continuous reform. RMB’s participation in SDR currency basket can better reflect the composition of major currencies in the world today, help to enhance the representativeness and attractiveness of SDR, and promote a more stable international financial and monetary system, thus contributing to the stability and growth of the global economy. After the entry of RMB into the basket, China will also need to continuously improve the transparency of its exchange rate policy.
8. Reform and filing of foreign investment approval
[Event] On October 8, 2016, the Ministry of Commerce issued the Interim Measures for the Administration of the Establishment and Change of Foreign-invested Enterprises. Since then, the establishment and change of foreign-invested enterprises will be changed from examination and approval to filing, and filing will not be used as a precondition for handling industrial and commercial and foreign exchange registration procedures, if it does not involve the prohibited or restricted categories in the 2015 edition of the Catalogue for the Guidance of Foreign-invested Industries, or the provisions on equity and senior management requirements in the encouraged categories.
[Comment] For a long time, there have been two different management systems for foreign-funded and domestic-funded enterprises in China. On the one hand, domestic and foreign investors face different tax treatment, there is a special examination and approval system for the establishment and change of foreign-invested enterprises, and foreign investment access faces many restrictions; On the other hand, the establishment and perfection of the socialist market economic system objectively requires the establishment of a fair competitive business environment.
Cui Fan, a professor in university of international business and economics, believes that the reform of foreign investment filing system has adopted the way of "establishing the trunk first, then adding branches and leaves". In the case that it is necessary to continue to promote the revision of the three laws on foreign investment and the legislative process of the unified Foreign Investment Law, this reform has grasped the key issues and made key breakthroughs in time, which is commendable.
9 Strengthen the protection of property rights
[Event] In November 2016, the Opinions of the Central Committee of the Communist Party of China and the State Council on Improving the Property Rights Protection System and Protecting Property Rights according to Law was officially issued. This opinion has made a "top-level design" for property rights protection from many aspects, such as strengthening the protection of economic property rights of various ownership systems, improving the legal system for equal protection of property rights, properly handling property rights cases formed in history, and strictly regulating the legal procedures for the disposal of property involved.
[Analysis] Those who have constant production have perseverance. Microscopically, the protection of property rights involves the vital interests of thousands of families; Macroscopically, the effective protection and realization of property rights of economic subjects is the basis for sustained and healthy economic and social development. This opinion gives a clear solution to the long-standing "loopholes" and "dead ends" in China’s property rights protection, which is helpful to stimulate creativity in all aspects and benefit China’s economy in an all-round way.
Miao Rong, chief researcher of china enterprise confederation Enterprise Research Center, said that protecting all kinds of ownership rights equally embodies the spirit of fairness and will play a role of "reassuring" and "ballast stone" in enhancing the confidence of private and foreign-funded enterprises. In the long run, the implementation of this opinion is obviously conducive to optimizing the business environment of various enterprises, avoiding vicious competition in various places, and the relationship between politics and business will be more "pro-"and "clear".
10. Clear positioning of the property market
[Event] After a series of regulatory measures in the second half of 2016, the relationship between "restricted purchase" and "destocking" in the property market had a clear answer at the year-end Central Economic Work Conference. The meeting pointed out that it is necessary to adhere to the positioning that "houses are used for living, not for speculation".
[Comment] In the past, the real estate industry was more regarded as an economic growth point and a consumption hotspot; Nowadays, the real estate industry is positioned as a livelihood industry that supports economic and social development. The 2016 Central Economic Work Conference will undoubtedly have a far-reaching positive impact on the stable and healthy development of the real estate market and even China’s economy.
Liu Hongyu, director of Tsinghua University Real Estate Research Institute, said that overemphasizing the investment attribute of housing will damage its residential attribute. At present, China is in a critical period of economic transformation and structural adjustment. In order to achieve the goal of building a well-off society in an all-round way, we must concentrate on putting major social resources and capabilities into reform and innovation, economic growth and social development. At this stage, emphasizing the residential property of housing is to avoid putting too much social resources into it in pursuit of virtual housing value.