President Xi Jinping wants China to aggressively carry out supply side structural reforms, as he called on local government officials to formulate policies that will help achieve the Central Government's economic strategy.

In a meeting with the Central Leading Group for Financial and Economic Affairs on Monday, the president warned that there will be risks and difficulties in initiating such crucial reforms, but local authorities should not shy away from these challenges, reported the China Daily.

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Xi was optimistic that the Chinese government was on the right track and that its efforts to implement such bold policy changes were bearing fruit after hearing about the inroads in the areas of Jiangsu, Chongqing, Hebei and Shenzhen.

"But some policies need to be studied further, and some regions have not yet taken effective actions," the president  pointed out.

Local governments across China have in fact taken Xi's cue and have started to develop and implement supply side structural reforms in order to counter the economic headwinds that have buffeted China's economy. 

In particular, the reforms aim to address long-standing issues such as excess capacity, housing overhang, and underperforming state-owned enterprises (SOEs).

The president stressed that China should therefore focus on crafting measures that would cut excessive industrial capacity, destock, de-leverage, lower corporate costs and improve weak links.

He noted that  the main goal of initiating such reforms  is ultimately to improve the quality and reduce "ineffective" supply.

According to Xi, this can be achieved by deepening the restructuring of SOEs, transforming government functions,  and overhauling of areas such as pricing, taxation, finance and social security.

The president also underscored that there should be greater synergy between the government and market players to ensure the success of China's supply side structural reforms. 

Tagschina, China economy, China Structural Reform, China Supply Side Structural Reform