Empirical Research on the Growth Path of China’s Industrial Economy under the Background of Supply-side Reform

Supply-side reform has provided opportunities for China’s industrial economic growth, but also experienced unprecedented challenges. Based on the background of supply-side reform, this paper applies the supply-side theory. First, it explores the mechanism between industrial overcapacity and economic growth from the macro perspective by using the two-sector production theory, and concludes that overcapacity is an important factor affecting economic growth. Then, based on the econometrics theory, a vector-autoregression model with quarterly time series was established, quarterly data of the past 12 years were selected, and relevant indicators were empirically analyzed and tested. From an empirical perspective, it was pointed out that the obstacle to China’s economic growth path lay in excess capacity. The research shows that excess capacity is the key factor that affects the development path of China’s industrial economy. In the end, this paper points out that the reduction of capacity has a positive impact on China’s industrial economic development.