Li Chungen: Several Relationships to Master in Building a High-Standard Socialist Market Economy System
The Third Plenary Session of the 20th CPC Central Committee proposed the significant judgment that "a high-level socialist market economy system is an important guarantee for Chinese-path modernization." It established the strategic goal of fully building a high-level socialist market economy system by 2035, further deepened the understanding of the laws governing the socialist market economy, and made deployments for key areas and crucial links in economic system reform. This serves as an overall plan and strategic arrangement for completing the construction of a high-level socialist market economy system, building upon the foundations laid by the "14th Five-Year Plan" and the report to the 20th CPC National Congress.
General Secretary Xi Jinping pointed out: "Proposing the reform goal of establishing a socialist market economy system was a major theoretical and practical innovation by our Party in the process of building socialism with Chinese characteristics." Since the reform and opening up [1], the Communist Party of China has creatively proposed developing a market economy under socialist conditions, established and perfected the socialist market economy system, and led the Chinese people in achieving development miracles that have attracted worldwide attention. In the process of further comprehensively deepening reform, properly handling the relationships between an "effective market" and a "promising government," "top-level design" and "practical exploration," and "high-quality development" and "high-level security" will effectively promote the construction of a high-level socialist market economy system, laying a solid foundation for the mid-21st century goal of fully building a great modern socialist country.
1. Correctly handling the relationship between the government and the market
Economic system reform is the focus of comprehensively deepening reform, and the core issue is handling the relationship between the government and the market. Since the Third Plenary Session of the 11th CPC Central Committee [2], our Party has continuously deepened its understanding of the government-market relationship while advancing economic system reform and reform and opening up. The Third Plenary Session of the 20th CPC Central Committee placed the construction of a high-level socialist market economy system in a prominent position, emphasizing the need to "give full play to the decisive role of the market in resource allocation" and asserting that "the role of the market mechanism must be better utilized." The socialist market economy can combine the superiorities of the socialist system with the strengths of the market economy, organically integrating the market’s decisive role in resource allocation with the better functioning of the government, thereby forming a greater synergy. The government possesses strong resource integration capabilities and social management functions, enabling it to play a key role in macro-control, public services, and social equity; meanwhile, the market, with its efficient information transmission and resource allocation functions, plays an important role in stimulating enterprise vitality, promoting technological innovation, and increasing economic efficiency.
Market-determined resource allocation is a general law of the market economy. In essence, a market economy is one where the market determines resource allocation, and it is also the most effective way to develop productive forces. However, the market is not omnipotent. If one blindly allows the market to allocate resources and pursue efficiency alone, it will lead to problems such as insufficient effective demand, unfair distribution, and information asymmetry, exacerbating social polarization and the gap between rich and poor. This necessitates scientific macro-control by the government. Through fiscal, tax, financial, administrative, and legal means, the government must break down barriers hindering the free flow of factors across regions and industries, protect the equal rights of various business entities across different sectors, ensure that each enjoys equal opportunities to use productive factors according to the law, maintain market order, and correct market failures. However, excessive government intervention may suppress market innovation and efficiency. Only by reasonably defining the boundaries of responsibility and dividing the functions of both can the effect of "1+1 > 2" be achieved. Therefore, we should respect market laws to ensure the market economy is both "liberalized with vitality" and "managed in an orderly manner" [3], avoiding excessive government intervention in the market mechanism. We must reduce micro-management and specific administrative approval items, minimize the government's direct allocation of market resources, and minimize direct government intervention in market activities. For issues the market cannot effectively solve—such as public safety, environmental protection, and income redistribution—the government must take timely measures to implement moderate management and regulation, protecting fair market competition and promoting healthy economic development. In the process of building a high-level socialist market economy system, we must accurately grasp the relationship between the market and the government, recognizing that their roles are complementary and organically unified. We should give full play to the government's important role in strategic planning and policy formulation while respecting market laws and releasing the vitality of market entities, thereby ensuring that both functions are fully exerted to form a greater synergy.
2. Persisting in the combination of top-level design and practical exploration
Fully building a high-level socialist market economy system is a complex and long-term systemic project. Achieving this goal requires overall coordination and scientific planning. We must both perform top-level design and holistic planning—ensuring the direction of reform remains unwavering, the path remains clear and feasible, and the circulation of the national economy remains unimpeded—and emphasize practical exploration and grassroots creativity to stimulate the endogenous momentum and innovative vitality of the whole society, promoting comprehensive economic and social progress.
The socialist market economy is a great undertaking without precedent, lacking ready-made models or experience for reference. Decades of reform practice have profoundly demonstrated that "crossing the river by feeling the stones" [4] and strengthening top-level design are dialectically unified. Organically combining top-level design with practical exploration is not only a major lesson from China’s reform, opening up, and socio-economic development but also an important thinking mode for solving development bottlenecks and promoting institutional innovation. Currently, China’s economic system reform has entered a "period of storming fortifications" and a "deep-water zone" [5], where new problems emerge constantly and new challenges arrive one after another. To effectively respond to these unprecedented difficulties, we must improve top-level design with a long-term perspective, focusing on prominent problems and key links restricting high-quality development. We must unswervingly uphold the Party's overall leadership, firmly uphold the Central Committee's authority and centralized, unified leadership, and give full play to the Party’s core leadership role in overseeing the whole situation and coordinating all parties. The Party's leadership must be integrated into all aspects and the entire process of reform. We should clarify the goal-orientation, problem-orientation, and effect-orientation of economic reform to promote reforms that connect individual points into lines, use lines to advance the whole surface, and combine specific focus points with the broader scope.
We must deploy innovation chains around industrial chains, building an innovation ecosystem where large enterprises lead and small-to-medium enterprises collaborate. We should highlight key reform tasks in various fields, give full play to the advantages of an ultra-large-scale market, accelerate reform and structural adjustment, and unblock the production, distribution, circulation, and consumption of the national economy to release domestic demand potential. We must deepen the reform of state-owned assets and state-owned enterprises (SOEs), optimize the layout of the state-owned economy, and adjust the economic structure, giving full play to the advantages of SOEs and state capital in energy, resources, and funding. We should promote the concentration of state capital in important industries and key fields related to national security and the lifeblood of the national economy. We must incentivize and guide social capital toward emerging industries, scientifically laying out forward-looking and strategic industries such as big data, cloud computing, and artificial intelligence. We should promote industrial innovation through technological innovation, establish a high-standard market system, and use a perfected socialist market economy system to drive the development of new quality productive forces, providing momentum for economic system reform through the accelerated development of these forces. At the same time, it must be recognized that improving top-level design is inseparable from practical exploration. This requires respecting the people's pioneering spirit, tapping into the creative power of hundreds of millions of people, vigorously enhancing independent innovation capabilities, and breaking through key core technologies as soon as possible. We must advocate for pooling wisdom and strength, thoroughly breaking down market entry barriers, supporting capable private enterprises in leading major national technical bottleneck projects, and further opening major national scientific research infrastructure to private enterprises. We should uphold the development step of "experiment first, summarize later, then promote" [6], daring to explore and innovate in practice, seeking effective strategies for new contradictions and problems, and striving to create fresh experiences that can be replicated and promoted, thereby facilitating a positive interaction where top-level design and practical exploration bring out the best in each other.
3. Realizing a positive interaction between high-quality development and high-level security
High-quality development is the primary task of building a modern socialist country in all respects and is the fundamental requirement raised by China’s economic development entering a new stage. In the process of building a high-level socialist market economy system, development and security are like the two wheels of a cart or the two wings of a bird—they promote each other and neither can be dispensed with. We must fully implement the Holistic Approach to National Security, persist in the positive interaction between high-quality development and high-level security, promote high-level security through high-quality development, and guarantee high-quality development through high-level security.
For the current and future period, China’s economic development remains in an important period of strategic opportunity, but both opportunities and challenges are manifesting new developments and changes. China’s economy has transitioned from a stage of high-speed growth to a stage of high-quality development. High-quality development does not merely refer to the growth of material indicators; it is a comprehensive and integrated development model. We must grasp, measure, and promote development through the internal unity of innovation, coordination, green development, openness, and sharing. Facing short-term problems, cyclical factors, and long-term structural contradictions in China’s economic operations, the key is to resolve issues of equilibrium and integrity within the socialist market economy. We must unswervingly consolidate and develop the public sector of the economy, and unswervingly encourage, support, and guide the development of the non-public sector. We should focus on developing the real economy, creating a favorable environment for the non-public sector by continuously strengthening advantages and compensating for weaknesses. Aiming to resolve structural contradictions and institutional obstacles that restrict high-quality development, we must promote a better fit between the relations of production and productive forces, the superstructure and the economic base, and national governance and social development. We must balance economic development between developed and underdeveloped regions, urban and rural areas, and the eastern, central, and western regions, coordinating key development fields in various places to form a regional economic layout with complementary advantages and higher quality. We must build a national unified large market, smooth the rational flow of factors, and ensure the "whole country is a single chessboard" [7]. We should elevate the level of modernization of industrial and supply chains, vigorously promote the transformation and upgrading of traditional industries, and achieve economic structural transformation and efficiency enhancement.
In the process of economic development, we must adhere to a broad concept of security, maintaining high vigilance against "Black Swan" events [8] and taking effective precautions against "Gray Rhino" events [9]. We must persist in taking the promotion of social fairness and justice and the enhancement of people's well-being as the starting point and endgame, paying close attention to and striving to meet the people's ever-growing needs for a better life. We must consciously practice the principles of the rule of law, regulating reform within a legal framework, further deepening and perfecting the reform of the property rights system, and building an efficient, comprehensive, and systematic integrated management system for intellectual property rights. This will ensure that the property rights of all ownership types receive lasting and equal legal protection. We must strengthen corporate compliance and the prevention and control of corruption risks, establishing sound internal management systems to ensure all business activities comply with laws, regulations, and industry norms, ensuring that rights are not abused and resources are not wasted. We must reinforce the primary responsibility of enterprises, the supervisory responsibility of departments, and the territorial responsibility of local governments, enhancing disposal efficiency and resolutely holding the bottom line of preventing systemic risks. We must strengthen interim and post-event supervision, standardize administrative inspections of private enterprises—clarifying the scope, method, and frequency of inspections to ensure fairness and effectiveness—so that enterprises always operate on a track of compliance. We must standardize local investment promotion laws and regulations, strictly prohibiting illegal or irregular policy incentives, ensuring the rationality and effectiveness of fiscal expenditures, and preventing problems such as local protectionism, market monopolies, and unfair competition. We should encourage "upward competition" and conduct comprehensive rectification of "involutionary" competition [10], promoting fairness and transparency in market competition to create a more equitable and dynamic market environment.
(Author: Li Chungen, Vice President of Jiangxi University of Finance and Economics and Special Researcher at the Jiangxi Provincial Research Center for the System of Theories of Socialism with Chinese Characteristics)
Source: Guangming Daily (January 7, 2025, Page 06) Web Editor: Huihui