China must reforms on the supply side to give full play to current growth engines to avoid the middle-income trap, a senior economist said Thursday.
The current growth engines of labor, land and natural resources, capital and innovation are constrained by old institutions, said Jia Kang, head of China Academy of New Supply-side Economics, a private think tank.
China needs reform on the supply side by updating regulations, he added.
Structural reform on the supply side will lend more steam to sustainable growth, President Xi Jinping said Tuesday at a meeting of the Central Leading Group for Financial and Economic Affairs. This is reported to be the first time that supply side reform has been mentioned at top government economic meetings.
Reforms on the supply side means sustainable growth instead of short-term demand management, according to Jia.
The government should focus on improving the labor force to address shortages and rising costs, prudently deal with land use and diversify financial services, Jia said.
Jia pointed out that the government should now shift their focus from reducing administrative approval to improving the quality and suggested optimizing ministerial functions and unifying development plans.
