Market given unprecedented priority

By Wang Zhanyang Source:Global Times Published: 2013-11-20 20:23:01

Illustration: Liu Rui/GT

Illustration: Liu Rui/GT



The 18th CPC Central Committee issued a decision at the conclusion of the Third Plenary Session, articulating that "economic reform is key, and the core solution is the proper relationship between the government and the market, leaving the market to play the decisive role in allocation of resources and the government to play a better role."

It is the first time that a document of the CPC Central Committee has emphasized "the general law of market economy" straightforwardly and in particular put the law at the very center of China's economic reform, which constitutes the greatest theoretical breakthrough achieved by the session.

 "The general law of market economy," which used to be placed in an obscure subordinate position, is given the top priority this time. No longer contradictory to "the socialist market economic system," the general law indeed helps put ahead its development. In fact, the general law is viewed as the primary rule in the socialist market economy, a term which has been redefined.

The new theory means that "the fundamental economic system with public ownership playing a dominant role and diverse forms of ownership developing side by side" reiterated in the decision is also in line with the general law that the market plays a decisive role in allocating resources.

When first proposed in 1956, the concept of public ownership actually meant that public ownership should account for more than 90 percent of China's economic sector, which obviously is at odds with the principles of the market economy. It was therefore remedied under the leadership of China's renowned reformer Deng Xiaoping, and by now non-public sectors have become major components of GDP, tax revenue, employment and technological innovation.

The session this year has attached enormous importance to the development of non-public economy, demonstrating that the connotation of "the dominant role of public ownership" has taken on a fundamental change. That will help comprehensively deepen reform in China.

In addition, the new theory implies that "giving full play to the leading role of State-owned economy" is also consistent with the decision to "let the market play a decisive role in the allocation of resources."

Many mistake the State-owned economy for State-owned enterprises, which, however, are just a special form and a small part of State-owned capital. And the core of economic reform lies in properly tackling the relationship between the government and the market.

The session stressed the public welfare brought by State-owned economy and capital that will work where the market fails. Consequently putting the State-owned economy to good use within this scope can be viewed as a basic rule compatible with the market's decisive part in resources allocation.

There is little direct exposition on breaking administrative monopolies in the decision, but the market-oriented reform sets the removal of such monopolies as an objective for State-owned enterprises that are heavily reliant on such monopolies.

The process of establishing new rules of a fair and equal market is a course of breaking the old system of administrative monopolies.

In this way, the State-owned economy is endowed with a new dimension: State-owned capital should increase investment in non-profit enterprises and contribute more to providing public services.

Aimed at promoting social equality and justice as well as improving people's wellbeing, the elaborations on the economy in the decision will accelerate the development of a socialist market economy instead of heading for a capitalist market economy.

The author is a contract research fellow of China Society of Economic Reform. opinion@globaltimes.com.cn

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