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2017-01-03

Compared with the past economic growth driven by demand and input, the present economic development is propelled by efficiency, the core of which is to achieve economic growth by enhancing total factor productivity through the supply-side “three engines” of institutional reform, structural optimization and factor upgrading.

First, the new drivers need to be nurtured for the following reasons. It is a response to the lackluster driving force of, the so-called “three-horse troika”, namely consumption, investment and export for pulling economic growth; China’s positive fiscal and financial policies are facing bottlenecks caused by inflation and deficit rate; large-scale factor input has been restricted by glass ceiling effect resulting from growing population, worsening environment and increased volume of money outflow; it has become difficult to continue taking GDP-oriented system as the target; and China needs to strive to become a strong manufacturing power with adequate hi-tech industry in the world.

Second, we need to take the following measures to nurture new drivers. 1. New market entities need to be nurtured. 2. New productive factors such as technology, talents and finance need to be developed. 3. A new market needs to take shape to meet both the traditional demand of basic necessities of life and the emerging demand of learning, entertainment, health care, security and beauty treatment. 4. Relevant new industries are to be built. 5. It is imperative to develop new sectors for growth points.

Third, we need to make headways with reform to foster the new drivers. 1. We need to push forward supply-side reform, bring into play the motivation of market entities, reduce taxes and fees, ease regulatory control, weaken monopoly and check excessive supply of currency. 2. We need to advance reforms relating to state-owned enterprises and assets, fiscal and monetary policies, science and education as well as population growth. 3. We need to nurture the innate drivers for reform, establish mechanisms for coordinating and evaluating reform results and optimize reform approaches for the improvement of reform itself.

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