Let the Government Perform Its Function Better in Market Economy

Requirements were made for the government's duties and roles in improving the socialist market economy system. In November 2013, the “Decision of the Central Committee of the Communist Party of China on Several Major Issues of Comprehensively Deepening Reform” adopted by the Third Plenary Session of the 18th Central Committee of the Communist Party of China pointed out, “The reform of the economic system is the focus of the comprehensive deepening of reforms. The core issue is to properly handle the government and the market. Relationship, so that the market can plays a decisive role in the allocation of resources and the government can play a better role.” The decision was made after the 18th CPC National Congress, in which the Party Central Committee once again emphasized that the relationship between the government and the market is an important task in comprehensively deepening the reform.

The relationship between “let the market play a decisive role in the allocation of resources” and “give better play to the role of the government” is a dialectical unity. Determine the boundary where the market plays a role, and at the same time determine the boundary where the government plays a role. Clarify the boundary where the government can better play a role, so that the government is neither “absent” nor “offside”, and advances and retreats when needed. In this way, the market can play a decisive role in resource allocation. Only in this way can we fully understand the relationship between the government and the market and realize the organic unity of “making the market play a decisive role in the allocation of resources” and “giving better play to the role of the government”. In a complete socialist market economy system, the government’s responsibilities and roles are mainly to maintain macroeconomic stability, strengthen and optimize public services, ensure fair competition, strengthen market supervision, maintain market order, promote sustainable development, promote common prosperity, and make up for market failure. With the deepening of Reform and Opening-up, our country's socialist market economic system has been continuously improved, but there are still two problems, one being excessive government intervention in the market, the other being insufficient supervision. This requires the government to do both “subtraction” and “addition” so as to effectively cooperate with the market and provide a strong and effective system guarantee for the promotion of scientific development. To do a good job of “subtraction” means to continuously reform the part that is not compatible with the requirements of the market's decisive role in resource allocation, greatly reduce the government's direct allocation of resources, and eliminate all institutional mechanisms that are not conducive to the market's decisive role in resource allocation. It requires the government to delegate power to the market and reduce improper interference in prices. Any price that can be decided d by the market is handed over to the market. The government should reduce improper intervention in investment, except for the projects that involve national security and ecological security, major national productivity distribution, strategic resources and major public interests. Enterprises will make investment decisions independently in accordance with laws and regulations no longer with government’s approval. The government should reduce the management of micro-affairs, cancel the approval of economic activities that can be effectively regulated by the market mechanism, and standardize management and improve efficiency of the administrative affairs that still need government’s approval. Doing a good “addition” is to supplement and strengthen the government's function and role in the market economy. The market plays a decisive role in the allocation of resources, but not all the roles. It is necessary to solve the problem of the government's “inadequate” market supervision and provide institutional guarantees for improving the efficiency of resource allocation, guaranteeing and improving people's livelihood, and maintaining social harmony and stability.

In the process of comprehensively deepening the reform, the government must always play a good role as a promoter of Reform and Opening-up, strengthen overall planning and top-level design capabilities, and promote the modernization of the national governance system and governance capabilities through its own reforms. The relationship between the government and the market is the most basic and most controversial issue in the development of modern economic society. The Third Plenary Session of the Eighteenth Central Committee of the Communist Party of China proposed that the market plays a decisive role in the allocation of resources, and emphasized at the same time that the government should play a better role. This is not only a profound understanding and incisive summary of the long-term historical experience at home and abroad, but also the direction and goal of comprehensively deepening the reform. Under the new historical conditions, properly handling the relationship between the “visible hand” of the government and the “invisible hand” of the market is an important issue that needs to be resolved in the comprehensive deepening of the reform.