Advancing supply-side structural reform is a major strategic initiative proposed by the central leadership with a view to China's overall economic development and a major policy for adapting to and leading the new normal of economic growth. Following the Central Economic Work Conference, the Jiangsu Provincial Party Committee and Provincial Government made arrangements to implement the five key tasks of supply-side structural reform. Since the beginning of the year, they have placed this work high on the economic agenda and carried out extensive research and planning. A strong consensus has now been formed across the province, and implementation is proceeding in an orderly and effective manner.
Deepen Understanding of the Guiding Principles for Supply-Side Structural Reform
Jiangsu will use the central government's guiding principles on supply-side structural reform to inform decision-making and practical work, ensuring that reform follows the right direction, proceeds steadily, and achieves sound results.
First, the province will develop an accurate understanding of the complete policy framework. Since November of the previous year, the central leadership has set out a series of important explanations on supply-side structural reform, gradually forming a comprehensive framework. In light of local conditions, Jiangsu has clarified the reform's fundamental purpose, principal objectives, basic pathway, priority tasks, and working methods so that these principles can be understood fully and accurately.
Second, Jiangsu will deepen understanding through its own development experience. After more than three decades of growth, both the scale and total volume of supply in Jiangsu have reached a high level. Building on the transformations from agriculture to industry and from a domestically oriented economy to a more open one, the province has placed innovation-driven development in a more prominent position and is promoting a third transformation—from a large economy to a strong economy. This approach has contributed significantly to Jiangsu's sustained and healthy growth. However, earlier balances between supply and demand were stage-specific, and that relationship is now changing profoundly. The quality and efficiency of the supply system have become increasingly important constraints, and the principal challenges are structural rather than cyclical. Supply-side structural reform is therefore both a key means of addressing current problems and a major opportunity to renew Jiangsu's economy.
Third, the province will understand the reform within the broader framework of socialist political economy with Chinese characteristics. The progression from the new normal of economic development to the new development philosophy and then to supply-side structural reform has attracted broad attention at home and abroad. Building on earlier study, Jiangsu has incorporated these principles into its education and policy work, strengthening both theoretical understanding and practical commitment to reform.
Implement the Five Key Tasks of Supply-Side Structural Reform
Reducing excess capacity is intended to create room for effective supply and must be carried out proactively, decisively, and thoroughly. Lowering costs is intended to improve enterprise competitiveness and must produce tangible results. Strengthening weak links is intended to improve the supply system and must focus on its most vulnerable, critical, and urgent areas.
Resolutely reduce excess capacity. In addition to the steel, coal, cement, and flat-glass industries identified nationally, Jiangsu has included shipbuilding among its priority sectors and will also phase out low-end, inefficient capacity in traditional industries such as light manufacturing, textiles, printing and dyeing, electroplating, and machinery. During the 13th Five-Year Plan period, the province planned to reduce crude-steel capacity by 17.5 million metric tons, phase out 8.36 million metric tons of coal capacity and 6 million metric tons of cement capacity, and eliminate 8 million weight cases of flat-glass capacity before 2018. After reducing shipbuilding capacity by 6.7 million deadweight tons during the preceding two years, a further 3.3 million deadweight tons was planned for the current year. Jiangsu also introduced an action plan for international capacity and equipment-manufacturing cooperation, established an industrial investment project pipeline, adopted comprehensive incentives for mergers and restructuring in overcapacity industries, and set an appropriate pace for the orderly exit of nonviable enterprises.
Apply targeted measures to reduce inventories. Reflecting regional differences in the property market, Jiangsu's overall approach assigns primary responsibility to municipal and county governments, applies categorized guidance and city-specific policies, and follows three pathways: targeted destocking, coordinated destocking, and transformation-led destocking. It also integrates destocking with new urbanization and permanent-resident settlement, improvement of the housing security system, balance between property supply and demand, and accelerated transformation and upgrading of the real-estate industry. The province planned to keep the inventory absorption cycle for commercial housing below 16 months by the end of the year and below 14 months by the end of 2018.
Reduce leverage prudently and in an orderly manner. Recognizing the different characteristics of government and corporate leverage, Jiangsu will take a categorized and cautious approach, maintain an appropriate pace, lower leverage ratios in an orderly way, and prevent and resolve debt risks. Government debt is generally consistent with the province's level of economic development and repayment capacity and has also helped create high-quality state-owned assets. Jiangsu will continue to strictly control new government borrowing and arrange debt-service funds systematically to prevent a government debt crisis. For corporate debt, the province will use capital-market reforms and regional equity markets to support a higher share of direct financing, particularly equity financing. It will also strengthen the management of financial debt risk, prudently address interconnected guarantee chains, develop streamlined channels for disposing of non-performing assets, and gradually mitigate potential risks.
Use multiple measures to lower costs. Jiangsu issued a package of 32 provincial measures, abolished provincially established administrative charges, and introduced zero provincial fees for enterprises, with an expected direct reduction in business costs of RMB 100 billion for the year. Local authorities were also required to introduce practical measures subject to public oversight, enterprise evaluation, and market testing. In the first quarter, costs per RMB 100 of principal business revenue among industrial enterprises above the designated size fell by RMB 0.6 year on year. The province will further reform administrative approvals, cancel or delegate additional high-value approval items, and reduce enterprises' hidden costs.
Target critical weak links. Jiangsu identified infrastructure, public services, the ecological environment, and modern agriculture as priority areas and launched five dedicated programs using project-based implementation. Planned investment totaled RMB 2.1 trillion over five years. The province prioritized 200 major projects for the current year, with targeted annual investment of RMB 400 billion. It will also make greater use of private capital, further ease market-access restrictions, improve public-private partnership models, and offer cooperation projects with sound development prospects and strong expected returns.
Implementation emphasizes five forms of integration. First, national policy will be closely aligned with Jiangsu's actual conditions: mandatory tasks will be implemented fully, while guidance will be applied creatively in light of local circumstances. Second, the decisive role of the market will be combined with effective government action, relying more on market-based and law-based instruments while strengthening organization and policy support. Third, supply-side reform will be coordinated with demand-side management, with appropriate expansion of aggregate demand alongside implementation of supply-side tasks. Fourth, reform, stable growth, and risk prevention will be advanced together, using reform-oriented solutions while managing the pace and intensity of change and balancing stakeholder interests. Fifth, current problems will be addressed while institutions and mechanisms are improved, ensuring both delivery of priority tasks and creation of a system conducive to long-term supply-side structural reform.
Use the Development of One Center and One Base as a Major Vehicle for Reform
Jiangsu plans to develop a globally influential industrial science and technology innovation center and an internationally competitive advanced manufacturing base. These initiatives focus on creating a modern industrial system, place innovation-driven development at their core, and aim to raise total factor productivity and increase medium- and high-end supply. For the innovation center, the province planned to establish the basic framework within five years, with major innovation indicators reaching the middle tier of innovative economies; within ten years, to build core regional functions and become an important node in the global industrial technology innovation network, with selected indicators reaching advanced levels; and by around 2035, to complete a globally influential industrial science and technology innovation center. For the advanced manufacturing base, the province aimed to achieve basic new industrialization and major progress toward becoming a manufacturing powerhouse by the end of the 13th Five-Year Plan, with selected industries reaching world-class levels. By 2025, it intended to create an advanced manufacturing system aligned with international standards in innovation, intelligent manufacturing, and product quality, with total factor productivity comparable to advanced global levels.
Three priorities guide current development of the Center and Base. First, enterprises will play the leading role. Companies will be encouraged to root manufacturing in research and development, strengthen and revitalize their R&D organizations, and improve innovation efficiency. Jiangsu therefore introduced programs for manufacturing-equipment upgrades and industrial internet development. Second, the province will aggregate innovation resources by attracting internationally renowned research institutions, regional R&D centers of multinational companies, partnerships with leading universities, and experienced domestic and international equity-investment institutions, thereby increasing the supply of high-end innovation resources. Third, Jiangsu will integrate industrial, innovation, and capital chains, coordinating research, industry, and finance so that innovation addresses the parts of industrial chains most critical to competitiveness and capital follows the fields where key technologies are being developed.
Development zones account for more than half of Jiangsu's general public-budget revenue and about 80% of its industrial value added, total imports and exports, and actual foreign investment. The provincial authorities are therefore guiding development zones at all levels to internationalize enterprises, cities, and talent, enabling them to serve as the main platforms for transforming the open economy, stabilizing growth, and demonstrating supply-side structural reform.
Since the beginning of the year, Jiangsu has achieved a strong start in economic growth, structural optimization, and improvement of people's livelihoods. In the first quarter, provincial GDP reached RMB 1.6509 trillion, up 8.3%; general public-budget revenue increased by 12.1%; fixed-asset investment rose by 9.3%, including a 28.1% increase in technological-renovation investment; and per-capita disposable income increased by 8.5% year on year. These results support the direction of supply-side structural reform. Jiangsu will continue to implement the reform agenda with confidence and determination, creating new advantages for the province's development.
