Unified domestic market will help nation propel high-quality economic growth

The central authorities on Sunday released a guideline on accelerating the building of a unified domestic market that is open, highly efficient, rules-based, and fair for all competitors. The document, jointly issued by the Communist Party of China Central Committee and the State Council, will serve as a major guide for the country’s future development based on the new “dual circulation” development paradigm, which takes domestic development as the mainstay of the economy, with domestic and international development reinforcing each other.

Given the volatile international situation, as well as the uncertainties associated with the role that foreign trade now plays in driving China’s growth, it is becoming all the more important for the country to tap the potential of its huge domestic market by building a unified domestic market.

According to the guideline, the government will work to foster a stable, transparent, and predictable business environment, with strengthened antimonopoly efforts and a crackdown on practices of unfair competition, and it will endeavor to promote efficient circulation and expansion of the domestic market with reduced transaction costs, all for the purpose of further stimulating market vitality and social creativity to achieve sustainable and consolidated growth.

In the Government Work Report delivered by Premier Li Keqiang during the recently concluded annual session of the National People’s Congress, the top legislature, the premier also said that the government would do more to “carry out a comprehensive pilot reform for the market-based allocation of production factors, and strive to accelerate the development of a unified domestic market”, without elaborating further.

The guideline, however, specifies that the country will develop a unified domestic market of productivity factors and resources that include capital, technology, energy and the environment.

To achieve that, the government’s market regulatory capabilities must be improved and impediments to the rational flow of production factors along all links of production, allocation, distribution, and consumption must be removed to promote and facilitate favorable circulation in the economy.

The document underscores the need of promoting the interconnectivity of market facilities, including building a modernized circulation network. Given that the share of total domestic logistics costs to the GDP was 14.7 percent in China in 2020, nearly two times the figure in the United States or Japan, there is a lot of room for the government to streamline the industry and standardize fees and charges to cut costs and increase efficiency, thus invigorating the sector.

Building a unified domestic market does not mean China is closing its doors. Rather, it marks a new stage in the country’s pursuit of high-level opening-up as the move will help cultivate new advantages for China to participate in international competition and cooperation.