Yang Xiangyang: Deepening the Market-based Allocation of Production Factors to Further Advance the Construction of a Unified National Market
In March 2020, the Opinions of the CPC Central Committee and the State Council on Building a More Perfect System and Mechanism for the Market-Based Allocation of Factors established the basic framework for deepening the reform of market-based factor allocation. In December 2021, the General Office of the State Council issued the Overall Plan for the Pilot Program of Comprehensive Reform of the Market-Based Allocation of Factors, further clarifying the implementation path for these reforms. The Decision of the CPC Central Committee on Further Comprehensively Deepening Reform and Advancing Chinese-path Modernization proposed improving factor market systems and rules, promoting the smooth flow of productive forces, the efficient allocation of various resources, and the full release of market potential. On March 5 of this year, General Secretary Xi Jinping, while attending the deliberation of the Jiangsu delegation at the third session of the 14th National People's Congress, emphasized the need to deepen the reform of market-based factor allocation and proactively break down local protection, market fragmentation, and "involutionary" competition [1]. Deeply understanding General Secretary Xi Jinping’s important expositions on the reform of market-based factor allocation and comprehensively implementing the strategic plans of the Party and the state are of great significance for advancing the construction of a national unified large market in depth.
I. The Significance of Deepening Market-Based Factor Allocation Reform to Advance the Construction of a National Unified Large Market in Depth
Building a national unified large market is a major decision made by the CPC Central Committee with Comrade Xi Jinping at its core from an overall and strategic height. The Opinions of the CPC Central Committee and the State Council on Accelerating the Construction of a National Unified Large Market proposed promoting the smooth flow of commodities, factors, and resources on a larger scale, and accelerating the construction of a national unified large market that is efficient, standardized, fair in competition, and fully open. The recently convened sixth meeting of the Central Committee for Financial and Economic Affairs made arrangements for advancing the construction of a national unified large market in depth, explicitly proposing the unification of factor and resource markets.
Practical innovation in constructing the New Development Paradigm. Deepening the reform of market-based factor allocation is one of the key paths for China to further accelerate the breakthrough of regional development barriers at the current stage. In the process of deepening this reform, the establishment of national unified market system rules and the improvement of fundamental market economy systems—such as property rights protection, market access, fair competition, and social credit—will help promote the free flow and efficient allocation of various productive forces, including labor, capital, technology, and data, on a national scale. This not only effectively breaks down the market fragmentation caused by local protectionism and eliminates administrative monopolies and industry barriers, but also stimulates innovative vitality through market mechanisms and improves total factor productivity. General Secretary Xi Jinping emphasized that we must deepen market-based factor reform, improve the basic systems of the market economy, comprehensively clean up and correct local protective behaviors, and promote the rational flow and optimized configuration of various productive forces across regions to better participate in the construction of a national unified large market. By establishing factor trading platforms and cross-regional coordination mechanisms, we can promote the mutual recognition of talent qualifications, the sharing of scientific and technological achievements, and the circulation and value-added of data factors. Efforts should be made to smooth the domestic cycle and effectively release the potential of internal demand; simultaneously, we must accelerate the expansion of high-level opening up to the outside world, promote the international cycle, and ultimately drive the factor market and the commodity/service market to achieve a higher level of dynamic balance across multiple dimensions, such as supply-demand matching, regional coordination, and industrial upgrading.
Supply innovation for achieving high-quality development. The reform of market-based factor allocation can significantly improve the allocation efficiency of factors such as land, capital, and technology. General Secretary Xi Jinping pointed out the need to build a digital economy with data as a key factor. Therefore, the market-oriented exploration of data factors is particularly crucial. Following the release of policies such as the Opinions of the CPC Central Committee and the State Council on Building Data Foundational Systems to Better Play the Role of Data Factors, China is accelerating the exploration and establishment of a system for the separation of data property rights and constructing a data transaction and circulation system. The release of the value of data factors is manifested in the improvement of total factor productivity. Through the integrated application of technologies such as the industrial internet and artificial intelligence, it promotes the intelligent transformation of manufacturing, the digital upgrading of the service industry, and the precision-based transformation of agriculture. This further cultivates new business forms such as intelligent connected vehicles and the metaverse, becoming a key engine for developing new quality productive forces. This supply-side structural reform is systematically improving the quality and efficiency of China's economic development by reconstructing production functions and optimizing the supply structure.
Institutional innovation to improve the socialist market economy system. General Secretary Xi Jinping pointed out that in adhering to the reform direction of the socialist market economy, the core issue is handling the relationship between the government and the market well, allowing the market to play the decisive role in resource allocation and the government to better play its role. Deepening the reform of market-based factor allocation should focus on key links such as factor price formation mechanisms and property rights protection systems, striving to resolve deep-seated contradictions within the market system. Regarding the market-based allocation of factors, we must deepen reforms in the allocation of land, labor, and capital to break administrative monopolies and regional barriers, promoting free flow and efficient allocation. In the field of property rights protection, we must improve a property rights protection system with fairness as the core principle, enhance the intellectual property protection system, and stimulate the innovative vitality of various business entities. By establishing a unified urban and rural construction land market, we can break the urban-rural dual structure [2] and achieve the equal exchange of land factors. These institutional innovations not only give full play to the market's decisive role in resource allocation but also allow the government to better play its role, promoting a better combination of an efficient market and a proactive government. This marks the continuous maturation and improvement of China's socialist market economy system in both theoretical innovation and practical exploration, building a more systematic and complete institutional guarantee for high-quality development.
II. Main Challenges Facing the In-depth Advancement of National Unified Large Market Construction through Deepening Factor Market-Based Allocation Reform
At present, China's reform of market-based factor allocation has achieved significant results: regarding land factors, the marketization of collective operational construction land [3] and pilot reforms of the homestead system are progressing steadily; regarding labor factors, the household registration system [4] reform continues to deepen, and the points-based residency policies for megacities are being gradually optimized; regarding capital factors, the registration-based IPO reform has been fully implemented, and the proportion of direct financing has significantly increased; regarding technology factors, measures such as amending the Patent Law and launching incentives for the transformation of scientific and technological achievements have been introduced; regarding data factors, important progress has been made in the structural separation of data property rights and circulation regulations. However, from the perspective of the requirements for deepening factor market-based allocation reform and advancing a national unified large market, several challenges remain.
The influence of administrative division thinking on the formation of a national unified large market. Generally speaking, the development of China’s factor market is still limited by administrative division thinking, resulting in a conflict between local protectionism and the construction of a national unified large market. This is specifically manifested in traditional factor markets like land and labor, where supply shortages in urban public services for the floating population hinder the optimal allocation of human capital and exacerbate the urban-rural development gap. In new factor markets like technology and data, problems such as insufficient mutual recognition of technical standards between different provinces and cities and low coverage of data circulation protocols are prominent, hindering the integrated development of different factor markets.
Institutional and mechanistic obstacles to the realization of factor value. Current imperfections in price formation mechanisms are mainly reflected in the land, technology, and data factor markets. The deep-seated reason is that institutional obstacles to market-based allocation still need to be eliminated. Specifically, factors such as the blurred boundary between administrative intervention and market mechanisms, the lack of a sound evaluation standard system, and lagging transaction infrastructure combine to obstruct the realization of factor value. For example, in the technology factor market, the lack of a scientific and unified evaluation system makes it difficult for many innovative achievements to realize their market value, leading to a tendency in the patent trading market to favor quantity over quality. This not only fills the market with low-value patents but also severely undervalues breakthrough technological innovations, thereby restricting the flow and potential transformation efficiency of innovative technological factors. General Secretary Xi Jinping pointed out that "data is a new production factor, a basic and strategic resource, and an important productive force." In the data factor market, value realization faces more complex problems, mainly reflected in unclear data ownership, a lack of universally recognized standards for data value evaluation, and difficulties in preventing compliance risks in data transactions. The road to a market-based price formation mechanism remains long.
Relatively slow transformation of the factor market. Developing and improving the factor market places higher demands on market competition order, property rights systems, and modern market supervision systems. In practice, market-based factor allocation reform still lacks targeted implementation plans. The interconnected national technology trading network needs improvement, and mechanisms for rights confirmation, pricing, and transactions—along with credit and supervision systems to facilitate the efficient flow of data and other factors—have not yet been fully established. Intellectual property protection also needs further strengthening. At the same time, the degree of internationalization of the factor market is insufficient, the ability to aggregate global factor resources needs to be improved, and the synergy of configuration among different factors needs enhancement. Especially with data as a new production factor, there is still a lack of clear and feasible diversified paths for effectively empowering the reconstruction of organizational models in the technology factor market and spawning new business forms and models.
Difficulty in balancing risk prevention and innovative development. Judging from China’s practice since the reform and opening up, how the factor market effectively handles the relationship between risk prevention and innovative development has always been a prominent issue. On one hand, for a long period, traditional factor markets dominated, and factor transactions or cross-regional flows required multiple layers of approval. While this lowered market liquidity, it also easily led to rent-seeking and other problems, resulting in unbalanced and potentially entrenched distribution of interests between departments or regions. On the other hand, fair and orderly factor market transactions require not only technical standardization but also a balance between risk prevention and innovative development. There is sometimes a disconnect between exploratory practice and regulatory rules. Dynamic feedback regulatory mechanisms, flexible and diverse regulatory models, and timely adjustments to regulatory intensity are crucial for balancing risk prevention and innovative development.
III. Path Choices for Advancing the Construction of a National Unified Large Market through Deepened Factor Market-Based Allocation Reform
Currently, the reform of market-based factor allocation has entered a critical stage. Facing the reconstruction of global value chains, the reshaping of international competition, and the urgent demand for domestic economic transformation and upgrading, we must pay more attention to improving market operation efficiency, ensuring a fair and orderly competition environment, and continuously expanding market openness. While using institutional innovations such as sound factor trading platforms to break administrative fragmentation, we should also use technological means like big data and blockchain to improve allocation efficiency, providing a solid guarantee for the construction of a national unified large market.
Establish and improve institutional synergy mechanisms and build new mechanisms for cross-administrative regional cooperative development. We should explore institutional synergy mechanisms involving central coordination and regional linkage. By combining top-level design with local practical pilots, we can gradually establish a national factor market framework with unified rules. To improve the basic systems of the factor market, we can start with standardized factor property rights registration, unified transaction contract templates and dispute resolution, and fair market access conditions. We should establish and improve unified national rules for factor rights confirmation, trading, and supervision, continuously weakening and eventually eliminating local protective policies. Actively carrying out cross-administrative factor market synergy pilots, such as establishing cross-administrative factor trading centers in the Yangtze River Delta or the Guangdong-Hong Kong-Macao Greater Bay Area, can help regularly assess pilot effects and summarize experiences worthy of replication and promotion. We should explore a basic model where national ministries lead the formulation of national rules, provincial departments are responsible for local implementation details, and the county level focuses on execution and supervision, combining "negative list governance + positive list guidance" [5] to gradually establish a dynamic adjustment mechanism for factor market construction.
Continuously improve the market pricing system and dynamically correct factor price signals. We must focus on promoting market-based price formation mechanisms for factors and accelerate the establishment of a market pricing system that reflects factor scarcity and true value. We should further deepen the price reform of traditional factors such as land, labor, and capital, improve the price formation mechanism for unified urban and rural construction land, and support qualified regions in accelerating the breakdown of barriers such as household registration restrictions to promote the formation of multi-tier capital market pricing. We should improve evaluation and pricing standards for new factors such as technology and data, continue to optimize the patent value evaluation system, and actively develop technology trading markets. We should encourage and support the formulation of rules for data asset rights confirmation, pricing, and transactions, and cultivate a group of professional data trading platforms. Professional third-party evaluation institutions should be established and introduced to formulate scientific evaluation methods and standardized processes for the value of new factors, ensuring marketization, objectivity, and credibility. We must strengthen factor price monitoring and regulation, promote the construction of an information platform for factor markets, strive to improve the factor price monitoring and early warning system, and accelerate the improvement of emergency response mechanisms for abnormal price fluctuations. We must also increase pre-emptive prevention and post-hoc handling of market monopolies and strengthen the supervision of unfair competition in factor markets.
Effectively strengthen the support of digital technology and strive to build a digital ecosystem. We must accelerate the construction of digital infrastructure for factor markets covering the entire country to provide support for digital transformation. We should establish a unified governance system for data factors, research and formulate technical standards or specifications encompassing the entire chain—including data collection, storage, processing, and transaction—and further clarify the rules for the confirmation of rights regarding data ownership, use, and income. Taking the application of blockchain and other technologies in data rights confirmation as an example, we should first pilot innovations in data circulation models in the Yangtze River Delta [6] region, explore the establishment of cross-regional data sharing mechanisms, and advance legislative work regarding the promotion of data factor circulation at an appropriate time. We must cultivate the modern data service industry, support the establishment of professional service agencies for data asset appraisal and compliance auditing, explore qualification certification schemes for data brokers, encourage financial institutions to develop data pledge financing products, and guide the cultivation of new positions such as technical appraisal and data compliance. We should create national-level factor trading platforms, integrate existing regional trading platform resources, construct a national digital trading system, and utilize big data analysis to simulate factor flows and provide real-time warnings for transaction risks.
Actively explore innovations in regulatory models and strive to enhance risk prevention and control capabilities. Given the rapid changes in the forms and circulation methods of productive factors in the digital economy era, we must take the dynamic balance between risk controllability and innovative development as our orientation, increase the intensity of reform for traditional regulatory frameworks, and explore regulatory models suited to the current stage of factor markets. We must emphasize differentiated regulation: for traditional factors such as land and labor, we should focus on strengthening full-chain regulation and improving the construction of credit mechanisms; for new types of factors such as data and technology, we should adopt inclusive and prudent regulation [7], setting a certain period for exploration and observation, encouraging and allowing relevant enterprises to engage in trial-and-error innovation within a controllable range, and summarizing effective practice models from different regions in a timely manner. We should promote smart regulation, actively utilizing the assessment results of big data analysis and risk warning models to optimize the deployment of blockchain regulatory nodes, promoting the controllability and traceability of the entire factor transaction process. We should strengthen collaborative regulation, research and formulate unified factor market regulatory standards, data sharing protocols, and other norms, and strive to improve international regulatory cooperation mechanisms in emerging fields such as cross-border data flow.
Accelerate the unblocking of factor flow channels and continuously optimize the efficiency of all-domain allocation. Guided by the realization of optimized factor allocation on a national scale, we must accelerate the breaking down of administrative barriers and regional fragmentation, exploring the construction of efficient, fair, and sustainable factor flow channels. We should improve public services for factor flows, establish and improve cross-regional employment service platforms, promote reform of the household registration system [8] and cross-regional coordination of social security in light of local conditions and at appropriate times, and accelerate the elimination of hidden institutional obstacles unfavorable to labor mobility. We must construct dynamic evaluation and adjustment mechanisms, establishing a multi-dimensional evaluation system covering economic, social, and ecological benefits, and regularly publish reports on factor flows. We should utilize policy tools such as tax incentives and fiscal subsidies to ensure that while resources are encouraged to aggregate in high-efficiency regions, underdeveloped regions receive the necessary factor support. We should increase support for supporting measures, advance the market-based reform of factor prices, improve cross-regional ecological compensation mechanisms, and explore the establishment of platforms for sharing the benefits of regional development. Through institutional innovation, we will continuously release the dividends of factor mobility and promote the formation of a factor market where flows are autonomous and orderly, and allocation is efficient and fair.
(The author is a director at the Jiangsu Suke Innovation Strategic Research Institute and a professor at the School of International Economics and Trade, Nanjing Finance and Economics University) Source: Qiushi (Red Flag Manuscript) [9] 2025, Issue 15 Online Editor: Ma Jingren