Capital Market Plays An Important Role In The Supply Side Reform.

Economy is divided into supply and demand. Demand mainly refers to consumption, investment, export and stock. Supply mainly refers to capital, labor, technology and system.

Economic problems can be divided into demand and supply. If the economic downturn is mainly the demand side, we should adopt fiscal and monetary demand management tools to stimulate aggregate demand; if the economic downturn is mainly the supply side structure, we should reform the old and establish new ones.

Corresponding to the "supply side structural reform" is "aggregate demand side stimulus".

The Party Central Committee and the State Council attach great importance to giving full play to the multi-level capital market.

Reform promotes the important role and mission of economic pformation.

In 2015, the central economic work conference put forward "focus on strengthening the structural reform of supply side", and discussed the important role of multi-level capital market in "capacity production, inventory elimination, deleveraging, cost reduction and compensation".

In December 23, 2015, the executive session of the State Council, "determined measures to further improve the proportion of direct financing, and enhance the efficiency of financial services in the real economy".

In recent years, the reasons for the downward trend of the economy and its policy response have been widely discussed in the field of macroeconomic research, and broadly divided into two understandings: the first view is that

It is externality and periodicity, and the way out is stimulation, "demand side total stimulation"; the second view is that economic downlink is structural and institutional deceleration, and the way out lies in reform and "supply side structural reform".

Whether from macro, meso or micro, it can be widely observed that China's economic slowdown is mainly structural and institutional.

More importantly, the market is supposed to be structured, but it is difficult to achieve structural obstacles because it is hard to achieve, stimulate more, reform less, and refuse to withdraw from the old growth mode. The inflow of hidden guarantees leads to mismatch of funds, thus forming the three major black holes (i.e., the iron triangle of the old growth mode: real estate, local financing platforms and overcapacity heavy industries), brewing financial risks and recessive unemployment.

The policy response should be mainly on supply side structural reform rather than demand side aggregate stimulus.

If the economic slowdown is externality and cyclical, the growth platform and dynamic structure remain unchanged. Anti cyclical easing policy should be adopted to stimulate the economy to return to growth center.

However, if the economic slowdown is structural and institutional, the growth platform and power have undergone profound changes. Institutional factors have hindered structural clearing, solidified the original economic structure, and overcapacity enterprises have become "

"Only stimulating and not reforming is actually delaying the old growth mode and encouraging and increasing leverage. It is the rhythm of" Minsky moment "and leading to the financial crisis.

Since the international financial crisis in 2008, the economy is facing a downward trend. Our country has adopted financial instruments, such as fiscal stimulus and currency drain, but failed to effectively solve the problems of China's economy and left behind a lot of risks and sequelae.

The capital market will take an important mission in the supply side reform.

In the future, with the gradual adjustment of A shares and the end of bubbles, the capital market reform will usher in important opportunities and time windows.

We will accelerate the formation of a stock market with complete financing functions, solid foundation system, effective market supervision and full protection of investors' rights and interests, so as to promote economic pformation and upgrading.

We should vigorously promote asset securitization and defuse financial risks.

Developing an open and inclusive multi-level capital market and reducing the financing cost of enterprises.

It is encouraged to optimize and restructure through capital market and resolve backward production capacity.

We should rely on the capital market, relax access, introduce new investors, and accelerate the reform of administrative monopoly industries.

Structural tax cuts should be implemented to encourage innovation.

We should promote the reform of state-owned enterprises and raise the rate of asset securitization.

While promoting the reform of supply side, we should build a "complete net" of society and seize the bottom line of social stability.

With the supply side reform breaking the ice, all sectors will have more confidence in China's economic prospects.