RONALD REAGAN, a sworn enemy of communism, and Xi Jinping, a doughty defender of Communist rule in China, ought to have little in common. Lately, though, Mr Xi has seemed to channel the late American president. He has been speaking openly for the first time of a need for “supply-side reforms”—a term echoing one made popular during Reagan’s presidency in the 1980s. It is now China’s hottest economic catchphrase (even featuring in a state-approved rap song, released on December 26th: “Reform the supply side and upgrade the economy,” goes one catchy line).
Reagan’s supply-side strategy was notable, at least at the outset, for its controversial focus on cutting taxes as a way of encouraging companies to produce and invest more. In Xiconomics, the thrust of supply-side policy is less clear, despite the term’s prominence at recent economic-planning meetings and its dissection in numerous articles published by state media. Investors, hoping the phrase might herald a renewed effort by the leadership to boost the economy, are eager for detail.
Mr Xi’s first mentions of the supply side, or gongjice, in two separate speeches in November, were not entirely a surprise. For a couple of years think-tanks affiliated with government ministries had been promoting the concept (helped by a new institute called the China Academy of New Supply-Side Economics). Their hope is that such reforms will involve deep structural changes aimed at putting the economy on a sounder footing, rather than yet more stimulus. Since Mr Xi gave the term his public blessing, officials have been scrambling to fall in line with supply-side doctrine, designing policies that seem to fit it or, just as energetically, working to squeeze existing ones into its rubric.
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