Constructing a National Unified Market to Support a New Development Dynamic

A national unified market is a prerequisite for the creation of a new development dynamic. The recently released Guidelines of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market set out the overall arrangements for this endeavor, which is a strategic decision of the Central Committee of the Communist Party of China (CPC) with Xi Jinping at its core made on the basis of a broad view of current circumstances.

I.  Achievements in the construction of a national unified market since the 18th CPC National Congress

Since the 18th CPC National Congress in 2012, General Secretary Xi Jinping has given instructions on several occasions concerning constructing a national unified market. The CPC Central Committee has issued its clear requirements. The Third Plenary Session of the 18th CPC Central Committee in 2013 stated that constructing a unified market system that is open, competitive, and orderly would allow the market to play the decisive role in resource allocation. The 19th CPC National Congress in 2017 promised to revise or abolish regulations and practices that impede the development of a unified market and fair competition. The Fifth Plenary Session of the 19th CPC Central Committee in 2020 proposed to improve the systems underpinning the market and ensure equal access, impartial regulation, openness, order, credibility, and legal compliance to foster an efficient and well-regulated unified domestic market with fair competition. As a result of concerted efforts, remarkable results have been attained in bringing about a national unified market.

The benefits of our market size are increasingly apparent.

As our economy has grown, China has developed a large and strong domestic market in both breadth and depth. Market entities are expanding rapidly, numbering more than 150 million, more than 40 million of which are corporations, and they are displaying impressive development vitality. Total retail sales of consumer products amount to 44 trillion yuan, which means that China is on the cusp of becoming the world's largest consumer market, and national online retail sales are above 13 trillion yuan, making China the world's largest online retail market. Thanks to our vast market, we have developed strengths in constructing new types of infrastructure and fostering emerging industries. China has more than 60% of the world's 5G base stations, and has built the world's largest 5G network. The operating mileage of high-speed railways is greater than any other country in the world, at over 40,000 kilometers, and annual production and sales of new energy vehicles in China are both above 3.5 million units, which are also the highest in the world.

The software and hardware required for market integration are being consolidated.

The foundations of our market system are continuously being improved, with strengthened protection of property rights, more rigid constraints to encourage fair competition, implementation of a negative list-based system for market access, and the accelerated construction of new credit-based regulatory mechanisms. Reforms on the market-based allocation of production factors have accelerated significantly, the unified market for urban and rural land designated for construction has been improved, and reform of the household registration system has promoted smooth flows of the labor force. A successful pilot of a registration system for the Science and Technology Innovation Board and ChiNext has been conducted, breakthroughs have been made in the reform of ownership rights, usage rights, and income rights related to applications of scientific and technological breakthroughs, and progress has been made in the exploration of a basic system for data as a factor of production. Significant progress has also been made in the construction of systems to facilitate flows of goods and services, including a more modern commercial logistics system.

There is greater understanding of the national unified market.

There is much deeper public awareness of the concept of fair competition. We have fully addressed a number of policies and measures that hinder the unified market and fair competition, with efforts made to curb local protectionism and designated trading. We are constantly bolstering efforts to enforce laws against monopolistic practices and have raised the effectiveness of regulation. Positive progress has been made in the construction of regional integrated markets, and regional cooperation mechanisms are continuously being reinforced. The unity and coordination of policies and rules and their enforcement have improved significantly, and integration, interaction, and complementarity between regions have increased. The appetite of the Chinese public for accelerating the construction of a national unified market has particularly increased since the CPC Central Committee issued its strategic plan to create a new development dynamic.

II.  Accelerating construction of a national unified market

As China enters a new stage of development, we face complex and changeable situations at home and abroad, requiring us to be sensitive to changes, methodical in our responses, and ready to make adjustments, thereby seizing the initiative in development. The decision of the CPC Central Committee to accelerate the construction of a national unified market is a proactive choice that promotes deep-level reform and the development of our domestic market into one that is not only large but strong as well; it is also an objective requirement to ensure smooth economic flows and high-quality development.

Anfa Supply Chain Park on Yagang Road in Guangzhou is lit up and bustling with activity, evening of April 15, 2022. To develop a unified national market, China is taking steps to modernize its commercial logistics network. PHOTO BY FU HAIYAN

Accelerating the construction of a national unified market will provide firm support for the creation of a new development dynamic.

The key to creating a new development dynamic is to ensure unimpeded economic flows. This requires the integration and circulation of various factors at the stages of production, allocation, distribution, and consumption. Issues such as regional barriers, local protectionism, and unfair competition continue to arise occasionally, hindering the free flow of production factors and restricting effective economic activities.  As a result, we must urgently accelerate the construction of a national unified market, break down local protectionism and market barriers, and ease key bottlenecks that hinder economic flows. We must promote more extensive smooth flows of commodities, factors of production, and resources and create an efficient and free-flowing national economy in which supply and demand are mutually reinforcing and production and marketing develop simultaneously. This will provide staunch support for a new development dynamic dominated by our domestic market but in which domestic and international markets are mutually reinforcing.

Accelerating the construction of a national unified market provides important support for promoting high-quality economic development.

To quickly make the national market unified will allow quality goods and services to thrive through market competition, provide market entities with a ready supply of more diverse options, and create and guide demand through better-quality supply, thereby reforming the quality of our development. It can leverage economies of scale and agglomeration economies and further reduce market transaction costs, thereby transforming the efficiency of development. It can also capitalize on the advantages of the rich range of applications and amplified benefits of innovation created by our vast market, promote the orderly flow and rational allocation of factors of innovation, improve institutional mechanisms that promote market-based applications of independent innovations, and support scientific and technological innovation and the development of emerging industries, thereby transforming our development momentum. China's economic development is facing the threefold pressures of contracting demand, supply difficulties, and weakening expectations. Accelerating the construction of a national unified market will stabilize development expectations; create a stable, fair, transparent, and predictable business environment; and concentrate resources, promote growth, stimulate innovation, optimize the division of labor, and promote competition, thereby ensuring sustainable and healthy economic development.

Accelerating the construction of a national unified market is required to improve the socialist market economy.

Creating a unified, open, competitive, and orderly market is an essential step in the process of developing a sound  socialist market economy. With a view to our future development needs, a high-level social- ist market economy will inevitably  require a well-run market, and a prerequisite for a well-run market is a national unified market. Based on the requirement to construct a national unified market, we must shore up the systems underpinning the market, the connections between market infrastructure, the allocation efficiency of production factors and resources, and the modernization of regulation, as well as better coordinate the division of labor. These steps will lay a solid foundation for building a more mature and established market economy.

Accelerating the construction of a national unified market is required to put China on a better footing in international cooperation and competition.

In today's world, markets are a scarce resource. China's vast market is gradually becoming a strategic resource that we can utilize in international competition. We must leverage this advantage to the full as well as take every opportunity to consolidate and reinforce our advantage. Keeping an open mind and open approach to the construction of a national unified market is essential to promote development through openness, capitalize on our comparative advantages, and more efficiently allocate resources. It is conducive to attracting advanced global resources and production factors centered around a national unified market. Based on our ability to better meet our own needs and benefit the rest of the world, we are further enhancing China's say in international economic governance and gaining new advantages in international cooperation and competition.

III.  Overall requirements for accelerating the construction of a national unified market

To speed up the construction of a national unified market, we must fully comprehend and accurately grasp relevant principles and requirements and adroitly handle the following four major relationships.

We must understand the relationship between an effective market and an effective government.

To build a national unified market, we must first properly balance and define the relationship between the government and the market as well as promote better integration of effective government with an effective market.  We must fully leverage the decisive role of the market in resource allocation, better utilize the role of government, and act in accordance with market and legal principles. We need to strengthen the construction of basic market institutions, reinforce the fundamental role of policies on competition, and accelerate the transformation of government functions. We also need to regulate the behavior of government better and improve the uniformity of policies, the consistency of rules, and the coordination of their implementation.

We must understand the relationship between the national unified market and local competition.

We need to coordinate efforts across the country, unify our national market, and ensure domestic economic flow is unimpeded. We will improve systems and mechanisms to unleash the enthusiasm of the central and local governments, preserve the unity of law, of government directives, and of the market in China, and put a stop to practices that hinder the unified market and fair competition, such as local protectionism, market barriers, and designated trading. While maintaining a national unified market, we will grant regions with the requisite conditions permission to conduct regional market integration. Regulating inappropriate market competition and distortion is not about denying the existence of differences in local development; rather, it is about encouraging local governments to change their approach, from competing in a race to offer the most preferential policies and subsidies to competing over the effectiveness of their reforms and the quality of their public services.

A tourist browses innovative cultural goods at a store near the Confucius Temple in Nanjing, October 5, 2021. Thanks to continued economic expansion, China has built an extensive and robust domestic market with deep foundations. PHOTO BY SU YANG

We must understand the relationship between a strong domestic market and greater openness to the outside world.

Constructing a national unified market, which is required to support the creation of a new development dynamic, does not require us to pursue development of our domestic market behind closed doors; rather, we must create a strong domestic market by boosting domestic flow, efficiently utilizing global factors of production and market resources, building better links between our domestic market and international markets, and opening to the outside world fully. To build a national unified market, we must leverage the advantages of the market in promoting competition and deepening the division of labor, as well as continue to grow our domestic market and promote its efficiency and unimpeded economic flows. We must also pay closer attention to the openness of our institutions, promote integration of domestic and international rules, and ensure the Chinese market matches the high standards of international market rules. We need to expand and deepen our openness to the outside world to increase the radiating effect of our national unified market.

A customer uses e-CNY to make a purchase at a coffee shop in Beijing's Xicheng District, February 17, 2022. Digital RMB trials, which are proceeding smoothly, will help significantly boost the quality and efficiency of financial services for the real economy. PHOTO  BY CNS REPORTER YANG  KEJIA

We must understand the relationship between current major tasks and medium- and long-term reform objectives.

The construction of a national unified market is a systematic project, and we must recognize the orderly, holistic, and coordinated nature of reform. On the one hand, we need to adopt a goal-oriented approach, focus on developing institutions, clarify objectives, and advance the construction of a unified market. On the other hand, we need to adopt a problem-oriented approach, focus on solving prominent issues and accurately comprehend the steps and processes involved in developing the size, structure, organization, space, environment, and mechanisms of our market. We must also integrate and give equal attention to delegating power and improving regulation, balance development and security imperatives, and enhance our capacity to maintain market stability and economic security.

IV.  Implementing key tasks for accelerating the construction of a national unified market

The Guidelines of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market serves as a blueprint of the plans and arrangements for accelerating the construction of a national unified market. We must adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, be firmly goal-oriented, and ensure that key tasks are implemented effectively.

We must strengthen the unity of basic market institutions and rules.

Improving basic institutions is essential for ensuring the efficient operation of the market system. We must improve the unified property rights protection system to ensure equal, comprehensive, and legal protection of various property rights and make protection more institutionalized and law-based. We must implement a unified system for market access, strictly apply the single national list-based administration model, and achieve full coverage of market access performance evaluations. We need to protect unified systems that promote fair competition, improve the institutional framework and mechanisms for implementing policies related to fair competition, establish coordinated safeguards for policies on fair competition and industrial policies, and optimize methods for implementing industrial policies. We also need to improve the unified system of social credit, promote high-quality development of the social credit system, and quicken progress on social credit legislation.

We must promote greater connectivity of market infrastructure.

Smooth connections between market infrastructures are a prerequisite to ensure unimpeded economic flows. The focus must be to improve the efficiency of market operations by enhancing the logistics network, ensuring information can be exchanged freely, and increasing the functions of relevant platforms. We need to promote the construction of a national network of logistics hubs, vigorously develop multimodal transportation, improve the national comprehensive, three-dimensional transportation network, and promote the construction of multi-level integrated transportation hubs. We need to optimize further the disclosure of information on market entities and facilitate the information interconnectivity of market entities. We also need to deepen the integration and sharing of platforms for trading public resources, clarify the standards and methods for incorporating various public resource transactions into the unified system of platforms, and continuously refine trading rules of the futures and spot markets for bulk commodities.

We must create unified markets of factors of production and resources.

Free flows of production factors and resources ensure greater efficiency of economic flows. The key is to guide both these things toward concentrations of advanced productive forces. We need to coordinate the reforms of various production factors, further develop a unified urban-rural market for land and labor, and promote smooth flows of human resources across regions. We must accelerate the development of a unified capital market and continue to ensure that finance serves the real economy. We must also accelerate the cultivation of unified technology and data markets, encourage exchanges of scientific and technological information between regions, establish sound systems and standards for the security and the protection of rights related to data, and improve total factor productivity. The construction of national unified markets for energy and related to the ecological environment will allow us to harness the multiplier effect of resource flows and give our economy strong growth momentum.

We must promote effective unification of goods and services markets.

Commodity and services markets are the markets of most direct concern to the people, as they have a close bearing on their standard of living and wellbeing. We must focus on areas of concern to the public and market entities and strive to improve systems related to quality and standards. We need to accelerate improvements to quality systems for commodities, bring quality standards related to major consumer goods in important areas in line with leading global standards, and ensure that products bound for the domestic market come off the same production lines, meet the same standards, and are of the same quality as exported ones. We must constantly improve systems related to standards and measurements, optimize the structure of government-issued standards and standards independently formulated by the market, and integrate and streamline national and industry standards. We should improve all aspects of consumer services, with the focus on housing, education and training, medical and health care, elderly care, childcare, and other key areas related to people's wellbeing, as well as promote list-based administration of matters relating to the protection of consumer rights and improve methods used to negotiate and handle disputes.

We must promote fair and unified market supervision.

Improving the efficiency of government supervision is an essential requirement to maintain regular market order. We need to unify oversight rules, strengthen administrative legislation on market supervision, and improve market supervision procedures. We should also ensure better standardization of market supervision and greater information transparency regarding supervision standards and rules in accordance with the law. We need to strengthen unified law enforcement, coordinate law enforcement resources, and cut down on hierarchy. We should also unify standards and procedures in law enforcement, regulate law enforcement conduct, and curb discretionary authority, in order to promote fair and impartial law enforcement. We need to improve all aspects of regulatory capabilities, including the new practices of randomly selecting inspectors to investigate randomly selected entities before releasing results to the public in a timely manner, credit rating-based supervision, Internet Plus supervision, and coordinated supervision across departments. We should also accelerate the rollout of smart supervision and establish sound coordination mechanisms for online regulation of markets across administrative regions.

We must better deal with inappropriate market competition and distortion.

Eliminating obstacles, such as vested interests and market barriers, is essential for the construction of a national unified market. We need to enforce laws against monopolies and unfair competition and revise or abolish regional policies that impede the construction of a unified market and fair competition, including local protectionism, market barriers, and designated trading. We must eliminate policies that discriminate against foreign-invested and other non-local enterprises through local protectionism as well as revise or abolish regulations and practices that prevent equality in terms of entering and exiting the market. We also need to rectify regulations and practices in the areas of bidding and procurement that are incompatible with a national unified market.

We must strengthen organization, implementation, and support for the construction of a national unified market.

We need to use targeted measures to strengthen positive guidance, clarify the negative list system, improve measures of incentives and restraints, and promote regional cooperation. We need to establish effective departmental coordination mechanisms that promote the construction of a national unified market, boost overall coordination, strengthen policy follow-up and evaluation work, and promptly conduct supervision and inspection. We need to formulate standards and guidelines on the construction of a national unified market, quickly publicize list of examples of inappropriate interference in the construction of the national unified market, and establish a system for reporting typical cases and conducting interviews and rectification. We also need to prioritize regional market integration, establish sound regional cooperation mechanisms, and actively draw on and replicate successful experiences and practices.

(Originally appeared in Qiushi Journal, Chinese edition, No. 11, 2022)