China have to Deepen Supply-side Reforms for More Quality Growth: Experts

China will stick to supply-side structural reform in 2019, including deleveraging and eliminating excess capacity, to improve the quality of economic growth, country's economists have said.

China made substantial progress in supply-side reform in 2018, with capacity-cut goals in saturated steel smelting and coal mining sectors beaten, and deleveraging pushed forward steadily.

Despite the progress, challenges and changes remain, as the Chinese economy is undergoing the process of restructuring and upgrading, according to Ning Jizhe, head of the National Bureau of Statistics.

"The imbalance between supply and demand has yet to be rooted out, and the solution of this contradiction hinges on the supply side," said Li Wei, head of the Development Research Center of the State Council.

According to Li, previous structural adjustments should be reinforced, with continued efforts to downsize glutted industries, reduce all types of business burdens and channel more energy into weak areas including infrastructure.

In terms of overcapacity cutting, a company called Yaojie Coal and Electricity Group Co Ltd's profit increased by nearly 40% year-on-year despite its coal production capacity being reduced by 1.7 MnT.

China's capacity cuts forced companies like Yaojie Coal and Electricity Group to make reforms to lower costs and improve efficiency. As a result, gross profit of China's large mining companies climbed 31.9% y-o-y to 146.7 billion yuan in the first 11 months in 2018. Meanwhile, profit of large and medium steel companies totalled 280.2 billion yuan, up 63.5% y-o-y, according to industry data.

"Supply-side structural reform provided the impetus to improve the quality and efficiency of gross domestic product growth," said Yang Weimin, deputy director of the economic committee of the Chinese People's Political Consultative Conference National Committee.
Yang suggested the government further reform to fix the mismatch in resource allocation, to enhance economic resilience. China's economy grew 6.6% y-o-y to reach 90.0309 trillion yuan in 2018.