At the 11th meeting of the central finance and economy leading group on Nov 10, President Xi Jinping stressed that China should strengthen structural reform of the supply front to increase the quality and efficiency of supply system and provide a growth impetus for sustainable economic development.

This indicates the new thinking of China's government on macroeconomic policy, and also points out the direction for its macroeconomic policy in the future.

Supply-front economics promotes growth by investing in capital, and by lowering barriers on the production of goods and services. It is the opposite of Keynesian theory, which states demand is the primary driving force for an economy. Instead, it recommends lower tax rates and deregulation to boost supply to create more demand.

At present, China's reform of the supply front during the new normal is a comprehensive strategic deployment that involves various aspects including industries, macro control, capital and the fiscal and taxation systems.

Absorption of excessive production capacity and industrial optimization and reorganization should be promoted. Enterprises should keep their competitive edge by reducing costs. The real estate industry should promote sustainable development through reducing stock.

Besides, attention should be paid to prevent and relieve financial risks and accelerate construction of a sound share market.