Regarding the important supply-side structural reform of "cutting overcapacity", the discussion in the society mainly focuses on two aspects: firstly, the current practice of cutting overcapacity uses not the conventional methods of the market economy, but administrative orders and planned indicators; secondly, it is believed that the "cutting overcapacity" work has substantially hit private enterprises and small and medium enterprises, and has strengthened the phenomenon of "the state sector advances, the private sector retreats". The Central Economic Work Conference at the end of 2016 put forward two specific requirements for "cutting overcapacity": firstly, use competition policies and environmental protection policies to resolve excess capacity and reduce ineffective and low-end supply in the industry; secondly, be good at using capital markets to promote enterprise mergers and acquisitions. A fair and efficiency-oriented competition policy creates a market environment with fair competition for market players, thereby stimulating the vitality and creativity of market players, and making good use of the capital market is an important choice to effectively resolve the problem of overcapacity.
