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More than 10 provinces issue plans for supply-side reform

(People's Daily Online)    09:44, May 20, 2016
More than 10 provinces issue plans for supply-side reform

Since the central government has put more emphasis on supply-side structural reform, more than 10 provinces so far have issued specific plans and special programs to further the cause, chicanes.com reported on Thursday.

Efforts are mainly focused on cutting overcapacity, de-stocking, de-leveraging, reducing costs and identifying growth areas, which were all listed as major tasks of the reform. Many of the provinces have made specific objectives of cutting overcapacity and de-stocking. Also, in order to reduce inventory of the property market, several provinces plan to encourage more farmers to buy houses.

Among those provinces, Shandong, Anhui, Zhejiang, Sichuan, Guizhou, Guangdong and Hubei provinces, along with Chongqing, have formulated comprehensive plans. Jiangsu, Gansu, Shanxi and Qinghai provinces, together with Shanghai and Tianjin, have launched plans targeting specific sectors. A meeting held by the Central Leading Group on Financial and Economic Affairs has already recognized their efforts.

Within those plans, de-capacity is regarded as a top priority, and many plans focused on the steel and mining industries. For instance, Hubei province planned to reduce 2 million tons of excess steel and 8 million tons of excess coal in the next three years. Jiangsu province promised that 6 million tons of coal and 4 million tons of steel will be reduced before the end of 2016. In addition, some provincial governments made timetables for the elimination of "zombie enterprises," as well as unprofitable and debt-laden enterprises.

Many provinces also formulated specific objectives for de-stocking the property market, including the promotion of leasing and lowering housing prices. According to the National Bureau of Statistics, the area of unsold housing in China during the month of April reached 727 million square meters.

In Shandong province, farmers can enjoy subsidies for deed taxes and other charges on their first urban housing purchase. In regions with a lot of stock, they can receive subsidies of between 3 and 10 percent of their spending.

With regards to de-leveraging, many provinces have prioritized expanding direct investment, reducing non-performing loan ratios and lowering financial risks. Guangdong proposed that, before the end of 2018, the leverage ratio of securities and future goods institutions will meet the requirements of regulation systems. Meanwhile, by that time, direct financing will account for more than 35 percent of the total financing amount.

In order to lower the cost of enterprises, provinces have also tried to reduce the burden of local companies by lowering transaction costs, labor costs, taxes, and the costs of insurance, power and logistics.

Southwestern Guizhou province, for instance, will substantially lower the price of electricity for industrial use. In addition, 70 billion yuan ($10.1 billion) will be set aside for Guizhou enterprises to help lower costs further.

Considering developmental imbalances around the country, each government has made plans to offset its own individual weaknesses. Zhejiang province plans to strengthen its weak links of ecology, rural construction, infrastructure, public service and technological innovation, promising to promote science and technology. By 2020, spending on research and development in the province will account for about 2.8 percent of its GDP. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Hongyu,Wu Chengliang)

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