Unified market to promote modernization

The resolution of the third plenary session of the 20th Central Committee of the Communist Party of China emphasized the need to build a unified national market and refine the systems underpinning the market economy.

Accelerating the construction of a unified national market is part of the efforts to comprehensively deepen reform and necessary to "perfect" the socialist market economy, ensuring the circulation of the domestic economy, and minimizing global economic risks.

A unified domestic market is a hallmark of a major economy. As the world's second-largest economy and second-largest consumer market, China has abundant human capital, the most complete industrial system globally, and growing high-tech innovation capability. These factors underpin China's advantages in manufacturing and supply.

Also, a unified national market can leverage market regulations, optimize resource allocation through market mechanisms, guide investment and industry flows, facilitate industrial upgrading and help adjust the production structure. Yet China can achieve high-quality development and Chinese modernization only after fostering a dynamic, competitive, open and orderly market.

A "unified market" here means an integrated domestic market that allows the free flow of goods, services and factors of production across industries, regions and sectors, and follows standards and rules. While "open" means the capability to ensure the free flow of goods and production factors across borders to participate in the international division of labor, "competitive" means market entities having the ability to make rational profit by taking advantage of price and supply-demand mechanisms, and ensuring fair access to market information and opportunities. And "orderly" means maintaining market rules to promote fair competition and resource flow, and granting all market entities equal access to production factors.

Building a unified national market involves two key factors. The first is the improvement of the market system and comprehensive function to enable different types of markets (goods, factors, tangible, intangible, domestic, international, rural, urban, spot and futures) to coexist and complement each other in order to promote economic circulation. The second is the requirement of effective market mechanisms, including price, competition, supply-demand and risk-curbing mechanisms.

To improve the market system, it is necessary to cultivate vibrant suppliers and buyers. Suppliers need market entities that operate independently and are responsible for their profits and losses. For that, the authorities need to develop the public sector while supporting the development of the non-public sector, and reduce business entry barriers and unnecessary approval procedures to encourage entrepreneurship. And to boost demand, the authorities should take measures to increase people's incomes, and to make good use of market mechanisms, they should optimize market economy institutions, better protect intellectual property rights, grant equal market access to all market entities, promote fair competition, and standardize economic activities.

For all this, the authorities need to establish a standard system to create an open and unified market environment, which requires eliminating local protectionism and monopolies, withdrawing local regulations that hinder fair competition, and further shortening the negative list.

Strengthening the standard system is necessary in businesses such as intelligent logistics, e-commerce, and agricultural product distribution, while it is important to strengthen supervision and evaluation of standards, and standardize the administrative management of certification.

It is also necessary to eliminate monopoly in industries to foster a fair competitive environment, separate the functions of the government and enterprises, curb improper market competition and intervention, and crack down on dumping and counterfeiting. But while eliminating local protectionism and regional barriers, the authorities should ensure the move accords with the local conditions, prevents homogeneous competition, and facilitates the free flow of goods and services.

Besides, the authorities should take measures to help transform the medium-and high-end industrial manufacturers with high potential, high added value and high technical requirements, and allow market mechanisms to eliminate long-term unprofitable enterprises from the market.

The authorities also need to further improve infrastructure connectivity among different regions and boost the urban-rural circulation system. Improving the infrastructure facilities in rural areas and the less-developed western region will enhance inter-regional coordination and reduce urban-rural disparities, which in turn will improve the quality and efficiency of the distribution system.

Moreover, the authorities should strengthen the unified domestic market with new quality productive forces, which can give rise to new business forms, models and scenarios by helping upgrade technologies and industries, and promote information sharing with the aim of increasing regional market interaction and promote innovation.

In the new dual-circulation development paradigm, the unified domestic market will be large in scale, higher in quality, and be more integrated, open, competitive and orderly. Such a market will be more efficient, and promote high-quality development and Chinese modernization.

The author is a research fellow at the National Academy of Economic Strategy of the Chinese Academy of Social Sciences.

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