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Opinion / Op-Ed Contributors

Build proper relationship

By Xu Hongcai (China Daily) Updated: 2013-11-19 07:01

Goal of reform is to establish an open and unified market with orderly competition and a service-oriented government

The communique on comprehensively deepening reforms, which was released after the Third Plenum of the 18th Central Committee of the Communist Party of China, has historical significance for China. It pointed out the need to speed up establishment of a modern market system, to build a new open economic system and to innovate the social management system, so as to promote the efficiency, fairness and sustainable development of the Chinese economy.

Build proper relationship 

Chinese Premier Li Keqiang (2nd L) speaks at a conference discussing the transformation of government functions and institutional reforms, in Beijing, capital of China, Nov. 1, 2013. [Photo/Xinhua] 

The most important point was the country's leaders pledged to let the market play a "decisive role" instead of just a "basic role" in the economy, which will improve the market's status in the economic system.

The communique said the core solution is establishing "the proper relationship between the government and the market". To establish the proper relationship between the government and the market and let the market play the decisive role in the allocation of resources, there are two areas that need to be focused on.

On the one hand, a modern market system needs to be established, which means building "an open and unified market with orderly competition", as the official document said. Unified refers to "an integral market" rather than a fragmented one, so obstacles among various factor markets, including the land market and financial market, need to be removed.

Moreover, an open market contains both opening-up to the outside world and to the domestic market. In particular, the openness of different industries to domestic private capital needs to be increased.

Besides, competition means there should be enough market participants to break the State-owned enterprise monopoly and it is necessary to lower the standards for market access. More importantly, the market price mechanism should be improved with full competition. Orderly means that the economy should operate according to the law, and the government should stick to the principle of "transparency, fairness, and justice", and be impartial toward all market players.

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