CPC Acknowledges Market's "Decisive" Role

The Communist Party of China (CPC) has acknowledged the market's "decisive" role in allocating resources, according to a communique issued after its key session about reform.

China will deepen its economic reform to ensure that the market will play a "decisive" role in allocating resources, according to the communique after the four-day Third Plenary Session of the 18th CPC Central Committee, which closed on Tuesday.

The market had been defined as a "basic" role in allocating resources since the country decided to build a socialist market economy in 1992.

For quite a long time after 1949, the idea of market had been a taboo associated with capitalism.

Even after the reform and opening up in 1978, the country had struggled to define the market and some dogmatists still questioned whether socialism could accommodate the market economy.

It was not until the 14th CPC National Congress held in 1992 that a socialist market economy became a consensus. At the Third Plenary Session of the 14th CPC Central Committee, the Party agreed that the market, under state macroeconomic control, should be the basic means of allocating resources.

Prof. Xie Chuntao, with the Party School of the CPC Central Committee, told Xinhua that the definition of market in Tuesday's document showed the Party's in-depth understanding of what the market economy is and what role the government should play.

Over the past two decades, the market has played an increasing role in China's economy, Xie said.

"The government did a good job but sometimes just intervened too much, which led to high administrative costs, low efficiency and corruption," he said. "I think the leadership understands what the problems are."

Tuesday's document also acknowledged that the core of economic reform is the proper relationship between government and market.

"The reform should let the market play a decisive role in allocation of resources and the government better serve its duty," the document said.

To let the market decide the allocation of resources, the primary task is to build an open and unified market with orderly competition, according to the document.

Land in cities and the countryside, which can be used for construction, will be pooled in one market, it said.

Under a modern market system, businesses should be allowed to operate independently and compete fairly while consumers should be free to choose and spend. Also, merchandise can be traded freely and equally, the document said.

In the document, the CPC pledged to clear barriers in the market and improve the efficiency and fairness in the allocation of resources. It will also create fair, open and transparent market rules and improve the market price mechanism.

While upgrading the role of the market, the CPC will transform government functions and improve the macro-regulatory system and governance.

It will deepen reforms of the administrative system, innovate with administrative methods and enhance the credibility and execution of the government.

The CPC leadership, taking office last November, has made important moves to allow dynamism of the market.

The new central government formed in March has been pushing forward an institutional reform to cut red tape and decentralize power. So far, it has abolished or transferred 221 administrative approval items to local governments.

Market-oriented reform is also under way. In July, China's central bank canceled the floor on lending rates. The China (Shanghai) Pilot Free Trade Zone launched in September is expected to create a testing ground for convertibility of the Chinese currency and the deregulation of interest rates.

"I believe, after the third plenary session, more will come," Xie said.