Han Wenxiu: Building a High-Level Socialist Market Economy System
The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Advancing Chinese-path Modernization," deliberated and adopted at the Third Plenary Session of the 20th CPC Central Committee, explicitly states that "a high-level socialist market economy is an important guarantee for Chinese-path modernization," and sets forth a series of major arrangements for its construction. To implement the spirit of the Third Plenary Session, we must study the historical process and great achievements of establishing and improving the socialist market economy, profoundly understand its vital role in advancing Chinese-path modernization, and comprehensively grasp and systematically advance the key tasks and measures involved.
The Socialist Market Economy is a Great Creation of Our Party
Since the beginning of reform and opening up, our Party has adhered to liberating the mind and seeking truth from facts. By profoundly summarizing the lessons of domestic and international economic construction and basing ourselves on China’s basic national conditions, we have, with immense political courage, continuously advanced theoretical, practical, and institutional innovation. We have creatively integrated the socialist system with the market economy, establishing and constantly improving the socialist market economy.
The Third Plenary Session of the 11th CPC Central Committee made the historic decision to shift the focus of Party and state work to economic construction and implement reform and opening up, creating the historical conditions for the development of a socialist market economy. The Third Plenary Session of the 12th CPC Central Committee broke through the traditional concept that pitted a planned economy against a commodity economy [1], proposing that China's socialist economy is a "planned commodity economy based on public ownership." The 14th Party Congress officially established the goal of economic systemic reform as the creation of a socialist market economy, fundamentally removing the ideological shackles that viewed planned and market economies as belonging to the category of basic social systems [2]. This resolved a key issue in China's reform and development. The Third Plenary Session of the 14th CPC Central Committee adopted the "Decision of the CPC Central Committee on Several Issues Concerning the Establishment of a Socialist Market Economy," formulating the basic framework for the system. The Third Plenary Session of the 16th CPC Central Committee made further decisions to improve the system, pushing economic systemic reform into deeper waters.
Since the 18th Party Congress, reform has entered a New Era, and our Party’s understanding and practice of the socialist market economy have deepened further. The Third Plenary Session of the 18th CPC Central Committee creatively proposed "letting the market play the decisive role in resource allocation and better playing the role of the government," achieving a major breakthrough in understanding the relationship between the government and the market. The Fourth Plenary Session of the 19th CPC Central Committee clearly incorporated the socialist market economy into the basic socialist economic system, making important arrangements to advance economic reform in breadth and depth. Building on the continuous achievements in economic development and systemic reform, the Fifth Plenary Session of the 19th CPC Central Committee proposed to "build a high-level socialist market economy." The 20th Party Congress, focusing on the central task of advancing the great rejuvenation of the Chinese nation through Chinese-path modernization, made further strategic arrangements and set new requirements for this goal. Finally, the Third Plenary Session of the 20th CPC Central Committee clarified that "a high-level socialist market economy is an important guarantee for Chinese-path modernization" and set the strategic goal of "comprehensively building a high-level socialist market economy by 2035."
The process of establishing and perfecting this system is one where our Party’s understanding of the laws governing socialist construction and market economies has deepened and sublimated. It is a process of exploring the construction of relations of production that correspond to the developmental requirements of the productive forces, a vivid practice of combining the basic principles of Marxism with China’s specific realities, and a great theoretical and practical creation of our Party.
Through long-term efforts, China has successfully achieved a great historical transition from a highly centralized planned economy to a vibrant socialist market economy, and from being closed or semi-closed to all-around opening up. We have achieved a historic breakthrough from relatively backward productive forces to becoming the world's second-largest economy.
In 2023, China’s GDP exceeded 126 trillion yuan, with per capita GDP reaching 89,358 yuan. Absolute poverty has been historically resolved [3], and the world's largest social security system has been built. There are 184 million registered business entities nationwide. Market-determined prices now cover almost all commodities, with the degree of marketization for goods and services reaching 97.5%. China’s manufacturing value-added accounts for approximately 30% of the global total, ranking first in the world for 14 consecutive years. Total trade in goods has ranked first globally for seven consecutive years. The Chinese economy is deeply integrated into the global market. Practice has fully proved that the establishment and improvement of the socialist market economy have greatly mobilized the initiative of hundreds of millions of people, stimulated the vitality of various business entities, and liberated and developed the productive forces. This has provided the institutional guarantee for the "two miracles" of rapid economic growth and long-term social stability, which are rare in the world.
A High-Level Socialist Market Economy is an Important Guarantee for Chinese-Path Modernization
On the new journey of comprehensively building a modern socialist country, a high-level socialist market economy is required to provide the institutional and kinetic guarantee needed to write a new chapter of the "two miracles" and march toward the Second Centenary Goal [4].
Building a high-level socialist market economy is necessary to achieve high-quality development. High-quality development is the primary task of building a modern socialist country. Currently, the prominent problem facing high-quality development remains unbalanced and inadequate development, and the relationship between the government and the market still needs further streamlining. For instance, the market system is still imperfect and market cultivation is insufficient. The core of building a high-level socialist market economy is properly handling the government-market relationship. By better combining an "effective market" and a "capable government," we can create a fairer and more dynamic market environment, optimize resource allocation, and maximize efficiency. This ensures we can "let it be lively without chaos" and "manage it well without stifling it" [5], allowing higher-quality goods and services to win out. This encourages superior resource elements to gather toward advanced productive forces and dominant entities, promotes the application of new technologies and business models, and provides the momentum for promoting "effective qualitative improvement and reasonable quantitative growth" of the economy, thereby consolidating the material and technical foundation for building a great modern socialist country.
Building a high-level socialist market economy is necessary to achieve a high-quality life. As development levels rise, people's requirements for quality of life are also upgrading. This requires us to protect and improve people's livelihoods during development, addressing the most direct and realistic interests concerning employment, income, education, childcare, housing, healthcare, elderly care, and leisure. Fully leveraging the market's decisive role in resource allocation and cultivating more active and creative business entities is the fundamental way to achieve high-quality employment, increase residents' income, and enrich the supply of products and services. Simultaneously, the government must better perform its role by improving the distribution system, the employment support system for key groups, the social security system, and the basic public service system. We must strive to narrow the gaps between regions, urban and rural areas, and industries, solidly promoting common prosperity so that the achievements of modernization benefit all people more fairly.
Building a high-level socialist market economy is necessary to gain strategic initiative amid the accelerating changes unseen in a century. Advancing Chinese-path modernization is a brand-new undertaking. The road ahead will inevitably encounter various contradictions and risks; "black swan" and "gray rhino" events [6] may occur at any time. To effectively respond, we must further improve the socialist market economy to make it more mature and stereotyped, using institutional stability to hedge against external uncertainty. We must coordinately advance economic reform and high-level opening up—internally achieving smooth access, consistent rules, linked infrastructure, and synergistic supervision; externally achieving compatibility with international rules, regulations, management, and standards. Relying on the advantages of our ultra-large-scale market, we must use the internal circulation to attract global resource elements, achieving a mutual promotion of dual circulation and gaining strategic initiative in increasingly fierce international competition.
Building a high-level socialist market economy is necessary to improve and develop the system of socialism with Chinese characteristics and to advance the modernization of the national governance system and governance capacity. The economic base determines the superstructure, and the superstructure must adapt to the changes in the economic base. The basic socialist economic system holds an important position in China's national governance system; systems in politics, culture, society, ecological civilization, and Party building are all significantly influenced by it. Whether the state can guarantee that the people are masters of the country, promote social fairness and justice, and improve livelihoods depends largely on whether the basic socialist economic system is upheld and improved. The socialist market economy will inevitably develop alongside practice. Existing institutions need constant refinement, and new fields require institutional innovation to fill gaps. By better integrating the socialist system and the market economy, we can continuously transform the advantages of our socialist system into effective national governance.
Key Tasks for Building a High-Level Socialist Market Economy
We must adhere to both goal-orientation and problem-orientation, combining comprehensive advancement with focused breakthroughs. By grasping the principal contradiction and the principal aspect of the contradiction, we will complete the following key tasks.
Improving the systems and mechanisms for implementing the "Two Unwaveringlys" [7]. Both the public and non-public sectors are important components of the socialist market economy and important foundations for China's economic and social development. With a view to further consolidating the micro-foundation of the socialist market economy, we must treat enterprises of all types of ownership equally, supporting and guiding them to improve resource utilization efficiency and management levels, and promoting the complementary development of all sectors. On one hand, we will deepen the reform of state-owned capital and state-owned enterprises (SOEs), promoting the optimization of the layout and structural adjustment of the state-owned economy. We will improve institutional arrangements for SOEs to advance original innovation, refine their classification-based appraisal systems, and enhance their core functions and competitiveness. We will promote the independent operation of natural monopoly segments and market-oriented reforms of competitive segments in industries such as energy, railways, telecommunications, water conservancy, and public utilities. On the other hand, we will create a better environment and provide more opportunities for the non-public sector. We will accelerate the introduction of a Private Economy Promotion Law to stabilize expectations and enhance confidence through the rule of law. We will further dismantle market access barriers and improve long-term mechanisms for private enterprises to participate in major national projects. We will improve financing support policies for private firms, refine long-term oversight of enterprise-related fees, and improve the legal system for clearing arrears owed to enterprises, while standardizing administrative inspections of private firms. We will support and guide private enterprises in improving their governance structures and management systems.
Accelerating the construction of a high-standard market system. We must deeply advance the construction of a unified, open, competitive, and orderly high-standard market system with complete institutions and sound governance to continuously reduce institutional transaction costs. First, construct a national unified large market. We will formulate guidelines for this, strengthen the rigidity of fair competition reviews, reinforce anti-monopoly and anti-unfair competition efforts, and clean up and abolish regulations and practices that hinder a unified market. Second, advance the market-oriented reform of factors of production. We will build a unified urban-rural construction land market, cultivate integrated national technical and data markets, and refine the mechanism whereby the market evaluates the contribution of production factors and determines remuneration accordingly. We will push forward price reforms in water, energy, and transportation. Third, improve the basic institutions of the market economy. We will protect the property rights of all types of ownership equally and for the long term in accordance with the law, preventing and correcting the use of administrative or criminal means to intervene in economic disputes. Acts that infringe upon the property rights and legitimate interests of any ownership sector shall be subject to the same responsibilities, crimes, and penalties.
Improve the macroeconomic governance system. Scientific macroeconomic regulation and effective government governance are inherent requirements for leveraging the advantages of the socialist market economy system. First, we must refine the national strategic planning system and the policy coordination mechanism. Centered on the implementation of national development plans and major strategies, we should promote synergy among fiscal, monetary, industrial, pricing, and employment policies. Both economic and non-economic policies must be incorporated into the consistency assessment of the macroeconomic policy orientation. We must improve the expectation management mechanism and strive to "stay ahead of the market curve." Second, we must deepen the reform of the fiscal and tax systems, strengthen macroeconomic guidance over budget preparation and fiscal policy, and establish a central-local fiscal relationship characterized by clear powers and responsibilities, coordinated financial resources, and regional balance. This involves increasing local independent financial resources and enhancing the degree to which the financial resources of cities and counties match their respective administrative powers [8]. Third, we must deepen the reform of the financial system, refine the financial regulatory system, and improve the incentive and constraint mechanisms for financial services to support the real economy. Improving the statistical system is of great significance for establishing a correct outlook on political achievements [9] and promoting high-quality development. We must improve the statistical indicator and accounting system that supports high-quality development, gradually promote statistics based on the location of business entities' activities, refine the system of consumption statistical indicators, and strengthen statistical coverage of the "new economy" and new sectors.
Accelerate the cultivation of a complete internal demand system. We should give full play to the advantages of a major-country economy with its vast depth, persist in taking the expansion of internal demand as a strategic baseline, and release a massive and lasting momentum for economic development. On one hand, we must enhance the foundational role of consumption in economic growth. We will accelerate the improvement of a policy environment where people "want to consume," "dare to consume," and "can consume." We must standardize and reduce restrictive measures on consumption and relax entry restrictions in service consumption sectors where the quality of supply can be improved through full market competition. We should reasonably increase public consumption and diversely expand the supply of inclusive non-basic public services. On the other hand, we must better leverage the key role of investment, establishing long-term mechanisms for government investment to support the construction of foundational, public-interest, and long-term major projects. We will improve mechanisms to stimulate the investment vitality of social capital [10] and facilitate the implementation of investments, guiding social capital into major projects and fields that address "weak links." We will coordinate "hard construction" (infrastructure) and "soft construction" (mechanism building) and advance the construction of "two major" [11] projects with high quality.
Improve the systems and mechanisms for developing new quality productive forces according to local conditions. General Secretary Xi Jinping creatively proposed "developing new quality productive forces" and called for the accelerated formation of relations of production that are better adapted to them. We must support enterprises in using digital-intelligent and green technologies to transform and upgrade traditional industries, refine the policies and governance systems that drive the development of strategic emerging industries, and strengthen the institutional supply for new fields and "new tracks." We will establish a mechanism for growth in investment in future industries. We should improve the systems and mechanisms for strengthening the development of key industrial chains, promoting technological breakthroughs and the application of results across the entire chain, and refining the collaborative mechanism for the orderly gradient transfer of industries within the country [12]. The development of new quality productive forces is inseparable from the foundational and strategic support of education, science and technology, and human resources. We must construct systems and mechanisms to support comprehensive innovation. The priority is to accelerate the construction of a high-quality education system, optimize the distribution of higher education, and speed up the formation of a vocational education system that integrates vocational and general education as well as industry and education. We will refine the scientific and technological innovation mechanisms in universities, optimize the organizational mechanisms for major scientific and technological innovation, strengthen the building of national strategic scientific and technological forces, reinforce the principal position of enterprises in technological innovation, and promote the transformation of scientific and technological achievements. We shall implement human resource policies that are more proactive, open, and effective.
Refine the institutional system for ensuring and improving people's livelihoods. We must persist in ensuring that reform focuses on and advances whatever the people care about and expect, promoting synergy between the government, the market, and society. First, we must form an institutional system that effectively increases the income of low-income groups, steadily expands the size of the middle-income group, and reasonably regulates excessively high incomes. Second, we must improve the mechanism for promoting high-quality and full employment, focusing on resolving structural employment contradictions. Third, we must improve the social security system, refine the national unified management system for basic old-age insurance, promote provincial-level unified management for basic medical insurance, and improve the social security systems for flexible employees, migrant workers, and those in new forms of employment. Fourth, we must deepen the reform of the medical and healthcare system, advance the reform of public hospitals, and promote the expansion and balanced regional distribution of high-quality medical resources. Fifth, we must improve the support and service system for population development, strengthen the "one old and one young" [13] service system, refine the fertility support policy system and incentive mechanisms, improve the policy mechanisms for developing elderly care services and the silver economy.
Improve the systems and mechanisms for high-level opening up. Constructing a high-level socialist market economy system is inseparable from building a new system for a higher-level open economy. In terms of institutional opening up, we must take the initiative to align with high-standard international economic and trade rules, achieving compatibility in rules, regulations, management, and standards in areas such as intellectual property protection, industrial subsidies, environmental standards, labor protection, government procurement, e-commerce, and the financial sector. Regarding foreign trade and investment, we must strengthen the coordination of trade policies with fiscal, tax, financial, and industrial policies. We will implement measures to fully cancel restrictive access measures for foreign investment in the manufacturing sector and promote the orderly expansion of opening up in sectors such as telecommunications, the internet, education, culture, and medical care. Simultaneously, we should optimize the functional division of labor in regional opening up, create diverse "highlands of opening up" according to local conditions, and accelerate the formation of a comprehensive opening-up pattern characterized by land-sea internal and external links and mutual assistance between the east and the west.
The tasks for reforming and constructing a high-level socialist market economy system are arduous and heavy. We must accurately grasp the core essence of each reform task, scientifically formulate implementation plans, clarify timetables and priorities, and consolidate primary responsibilities. We must grasp implementation with the "spirit of driving a nail" [14], accelerating the realization of various reform tasks to provide a powerful impetus and institutional guarantee for the steady and sustained progress of Chinese-path modernization.
[The author is the Deputy Director in charge of daily operations of the Office of the Central Financial and Economic Affairs Commission.] Source: Study Times (学习时报) Web Editor: Hui Hui