This year, the basic development of the Chinese economy has been good, with huge potential and strong resilience, according to China's Central Economic Work Conference, a key economic meeting that was held in December. On the other hand, difficulties and challenges still remain, especially regarding overcapacity. I believe that as long as the relevant policies are in place, many measures can be implemented to continue growing the economy.

Recently, supply-side reform has become a catchphrase. The conference decided to create new supplies, improve supply quality and boost demand. There are many examples that show how supply contributes to consumption, such as with Apple products. In China, the high-speed railway is another example; it has become one of Chinese people's favorite modes of transport and a new business card of the country. The high-speed railway is kind of new supply, and it indeed creates new demands.

The market may feel some stress about these adjustments, but in my mind, such stress is not necessary. Eliminating under-developed capacity and increasing new supplies are a necessary part of industrial upgrading.

Industrial upgrading in China has achieved a lot. Enterprises are taking the leading roles in various industrial sectors. In the telecommunication and mobile phone sector, Huawei has been on the rise. Similar advancements are taking place in the electronic car sector. At a recent competition held in Melbourne, Australia, a Chinese luxury travel bus broke two Guinness world records for its distance traveled (1018 kilometers on a single battery charge). In addition, the Internet Plus Strategy holds promise. Transport platforms like Didi have significantly reduced consumer costs while easing traffic congestion.

I believe that China's newly-developed industries are full of potential. Sound macro-economic policies from the government are keys for these enterprises to successfully upgrade. Few countries in the world had recessions due to industrial problems. On the contrary, many countries had economic crises or long-time recessions because of inappropriate macro-economic policies. Monetary and taxation policies often cause slowdowns. The Central Economic Work Conference decided to keep stable macro policies, which aim to create a stable macro atmosphere for structural reform. I think this is very proper.

Meanwhile, the conference said China will reduce financing costs. In my mind, this is very necessary, as the high costs of financing have directly limited the development of enterprises. Too many enterprises have met difficulties in financing, which is hard and expensive.

Furthermore, the conference planned to increase proper financial expenses and government investment. I believe that a supply increase does not only relate to enterprise supply, but also to government supply. In many cases, the government supply should do more. Basically, governments should improve the ability to provide supply, as the supply of public products implies a huge potential to boost the Chinese economy.

The author is Gao Liankui, Research Fellow at Renmin University of China

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