Saying rude things about ‘supply-side structural reform’

…is not that common in China, where the drumbeat of propaganda for the government’s latest economic slogan has become nearly deafening. Tiff Roberts of Bloomberg however manages to quote a number of people, including me, who are generally un-enthused about what is happening, in a piece entitled “China’s ‘Supply Side’ Is a Far Cry From Reagan’s“:

No one expects the macroeconomic textbook definition of supply side in Xi’s China—the theory that inspired Ronald Reagan’s economic policies in the 1980s. Reagan’s version had as its goal freeing up the economy by cutting taxes and regulations in the hope that companies would invest and produce more, driving growth. Xi’s “supply-side structural reform” is a grab bag of policies, focused on cutting excess capacity, shuttering a limited number of “zombie” companies, and subsidizing favored and often inefficient industries, says Barry Naughton, an expert on the Chinese economy at the University of California at San Diego. The point isn’t to encourage supply but, for the most part, to curtail it. …

Provincial bosses, however, are eager to appear enthusiastic about the slogan. With a once-every-five-years party congress coming in the fall of 2017, they’re vying to show they’re on board with the policy; they hope that will help them win a promotion when China shuffles much of its senior leadership. Hebei, home to about one-quarter of China’s total steel production; Heilongjiang, part of China’s northeastern industrial rust belt; and coastal Shandong have all recently issued supply-side plans, including capacity reduction targets and tax breaks for new industries such as electric vehicles and eco-friendly agriculture. Guangdong, better known for making toys than steel, outdid others with a six-part, 42-page document, complete with a vision statement.

There is more discussion of what Chinese-style “supply-side reform” is and is not in the full piece.

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