“The government and the market”

After more than 30 years, China continues to open up and proceed with reform. It constantly refines its socialist market economy to allow the market to play a bigger role. To further improve the economic structure, China has to properly handle the relationship between government and market, a major challenge under the new conditions.

In its report to the 18th National Congress in November 2012, the Communist Party of China (CPC) stated, “The underlying issue we face in economic structural reform is how to strike a balance between the role of the government and that of the market, and we should follow more closely the rules of the market and better exercise the role of government.”

To manage this relationship properly, the market should play a decisive role in resource allocation, while excessive government intervention in the operations of individual enterprises must be avoided; at the same time the government should improve its own performance by transforming its functions, optimizing its organizational structures, and introducing a better macro-adjustment system.

The development of a socialist market economy necessitates contributions from both the market and the government, which should forge a synergy to propel the sound and sustainable development of the economy and society.