At the Central Economic Work Conference that ended on Friday it was noted that the significant structural imbalance in the economy is the prominent contradiction and problem, and that supply-side structural reform is of great importance to achieving a new dynamic balance in the supply-demand relationship.

This was the first time the central government has used the term significant structural imbalance.

Statistics show that the liability ratio of China's major large and medium-sized steel and iron enterprises during the 12th Five-Year Plan (2011-15) was more than 70 percent. The steel and iron industry has turned from regional overcapacity to absolute overcapacity at the national level.

Such kind of overcapacity results from an imbalance between supply and demand. Therefore, eliminating overcapacity is one of the top priorities for China's economic structural adjustment at the moment.

The essential solution to significant structural imbalance is reform and transformation. That's why the central government has been trying hard to promote five major tasks of structural reform, including cutting overcapacity, destocking, deleveraging, reducing costs and making up for deficiencies.

In addition, the relationship between the government and the market, and the government and enterprises, needs to be further adjusted to enable the market to play a decisive role in the distribution of resources.