Under the backdrop of the "new normal" of the Chinese economy, why Chinese economy in the middle-income stage should promote the supply-front structural reform and how to promote the reform, are the very important issues worthy of further study. This paper introduces the concept of potential energy about income and constructs a potential energy model about income to make an analysis of reasons for supply-front structural reform in China and the breakthroughs. The potential energy about income means the energy influencing income growth and being in the form of potential energy, which results from income potential gap between high and low income earners owing to rapid income growth. And excessively large potential energy about income can affect labor force' production enthusiasm and ultimately harm the labor productivity. According to the principle of minimum potential energy, it would reduce the coordination of group work by widening income gap. However, there is an obvious economic gap in current China and also a trend towards growing potential energy about income. As so large-scale economy, China's economic potential energy cannot maintain for a long time in the range of the minimum potential energy. Based on the discussion of reasons for the formation of middle income trap, it clarifies the breakthroughs of the advancement of the supply-front structural reform in China. It shows that structural reform is to make full use of the market power, take the increase in the mobility of labor force as the breakthrough, make element resources like labor force flow freely, reconstitute the suitable production groups, reduce group asynchrony resulting from potential energy about income, and eventually improve labor productivity and supply-front production efficiency & capabilities.
/ Journals / Journal of Shanghai University of Finance and Economics
Journal of Shanghai University of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
GuoChanglin YanJinqiang WangWenbin WuWenfang, Vice Editor-in-Chief
Reasons for Supply-front Structural Reform and Breakthroughs:Based on the Potential Energy Model about Income
Journal of Shanghai University of Finance and Economics Vol. 18, Issue 06, pp. 4 - 15 (2016)
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Zhou Weimin. Reasons for Supply-front Structural Reform and Breakthroughs:Based on the Potential Energy Model about Income[J]. Journal of Shanghai University of Finance and Economics, 2016, 18(6): 4–15.
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