Jiang Xiaojuan on further deepening economic reforms
For Deputy Secretary-General of the State Council on level playground, phasing out local protection, reforming domestic regulation to align with int'l standards, and equal rights for migrant workers.
Long-time readers will know I frequently share the writings of Jiang Xiaojuan, currently a professor at the University of the Chinese Academy of Social Sciences. Before retiring from government service, she was Deputy Secretary-General of the State Council, China’s cabinet. She oversaw education, science and technology, and healthcare in this key vice-ministerial role coordinating relevant ministries.
Her frequent publications are notable because few high-ranking Chinese officials, typically defined as those at the vice-ministerial level and above, publish insights publicly. Additionally, her extensive experience in government clearly informs her analysis, and, simply put, her work stands out. As someone who closely follows elite public discussions, I often lament the growing poverty of genuine discourse. Speeches, essays, and analyses are increasingly devoid of insights. Jiang is an exception, consistently delivering substance in her writing. (Another notable retired vice-minister is Liu Shijin, former Deputy President of the Development Research Center of the State Council.)
Today’s newsletter highlights one such contribution. On September 25, the Publicity Department of the Communist Party of China (CPC) Central Committee, the Office of the Commission for Comprehensively Deepening Reform, the National Development and Reform Commission (NDRC), and the Chinese Academy of Social Sciences (CASS) hosted a symposium on “the theory of comprehensively deepening reform in the new era.”
This event was covered by Xinwen Lianbo (News Simulcast), the prominent 7pm daily news show produced by China Central Television, along with the People’s Daily. The attention is no surprise, given that the Publicity Department, which oversees both outlets, organized the event. However, what’s a bit unusual is that the People’s Daily published edited versions of speeches [October 9] [October 10] from the symposium. Among them, Jiang’s easily stands out, as she directly addressed pressing issues and offered practical recommendations.
All emphasis is mine. - Zichen
加快构建高水平社会主义市场经济体制
Accelerate the Establishment of a High-Standard Socialist Market Economy
The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) adopted the Resolution of the CPC Central Committee on Further Deepening Reform Comprehensively to Advance Chinese Modernization (hereafter referred to as the "Resolution"), emphasizing economic structural reform as the spearhead to build a high-standard socialist market economy. Here are some of my reflections on the historical context and key tasks for building a high-standard socialist market economy.
I. Adhering to the Combination of Establishing New Systems and Abolishing Old Ones, Emphasizing Institutional Building While Removing Deep-Seated Institutional Barriers to Ensure Effective Market Allocation of Resources
Over the past many years, China's reforms have primarily focused on establishing and improving the socialist market economy, with the main task of dismantling the constraints of the planned economy, allowing the market to play a fundamental and decisive role in resource allocation under state regulation, and thus liberating and developing productive forces. These reforms are primarily incremental, benefiting all relevant parties involved and generating strong motivation and vitality internally. There are still some deep-seated institutional constraints that do not meet the demands of productivity development, which need to be dismantled to unlock new growth potential and promote productivity development.
In the meantime, it is essential to recognize that China's economy is already significant and that many industries have reached substantial capacity. Further liberating and developing productive forces must rely not only on incremental expansion but also on optimizing, restructuring, and updating existing resources. The adjustment of existing resources involves complex conflicts of interests, where some parties benefit while others may lose, leading to resistance to and interference in reforms.
Therefore, institution-building is essential to clarify market rules and standardize behavior to improve overall social efficiency. For example, market access should be applied only to a few specific industries, and a system of institutional arrangements must be established to ensure that all forms of enterprises, regardless of ownership, have equal access to factors of production, compete on a level playing field, and receive equal legal protection. This means that no enterprise should receive undue benefit through protection from competition. This way, an efficient institutional environment can be created to maximize the optimization and reallocation of existing resources and capacity across ownership forms, industries, and regions.
In institution-building, enterprises of all ownership forms must adhere to rules and standardize their behavior according to their specific ownership characteristics. For example, state-owned enterprises (SOEs) should prioritize fulfilling national strategic missions rather than seeking preferential access to resources and market opportunities. Meanwhile, private enterprises should improve their governance structures and management systems, enhance compliance, and mitigate corruption risks.
II. Upholding the Principle of Survival of the Fittest, Facilitating the Concentration of Production Factors in Advanced Productive Forces Through Institutional-Building While Improving the Business Environment
Achieving survival of the fittest through fair competition is a basic function of allowing the market to allocate resources efficiently. In the past, China’s efforts to improve the business environment have largely focused on fostering "winners," i.e. supporting "high-performing enterprises," but insufficient attention has been given to the market's role in eliminating underperforming entities, and effective institutions to facilitate this process have been lacking. In some regions, local governments have repeatedly bailed out enterprises that should have been phased out, in an effort to preserve short-term employment and output. This has resulted in a situation where efficient enterprises survive, but inefficient firms continue to operate in the market.
The market must be allowed to effectively eliminate low-efficiency, low-competitiveness productive forces, which is necessary to facilitate the smooth concentration of various factors of production toward new-quality productive forces. The Resolution takes a significant step forward in this regard by calling for refining the enterprise bankruptcy mechanism, exploring the establishment of a bankruptcy system for individual persons, moving ahead with integrated reforms concerning the deregistration of enterprises, and improving the market exit system. Furthermore, measures such as establishing a unified national market, enhancing the mandatory nature of fair competition review, taking stronger action against monopolies and unfair competition, and bringing local regulations and institutions for attracting investment under regulation are all critical institutional elements that ensure that the market operates efficiently, enabling "survival of the fittest" throughout the entire process from entry to operation and eventual exit.
III. Aligning Domestic and International Efforts, Coordinating High-Level Opening-Up and Construction of a High-Standard Market Economy While Expanding Opening-up
Currently, China's level of openness is already high. Tariffs and non-tariff barriers are significantly lower than those in other developing countries, restrictions on foreign investment in the manufacturing sector have been completely lifted, and the scope of the service sector that is open to foreign investment continues to expand. In the future, while continuing to open up, greater emphasis must be placed on aligning and coordinating domestic reforms with opening-up efforts. When the domestic system and institutions have problems, it’s impossible to achieve high-level opening up.
For example, in an open environment, domestic enterprises can raise capital domestically, attract foreign investment, and invest abroad. However, if domestic financial sector reforms are not fully implemented and capital allocation remains inefficient, cross-border capital flows may become overly active and distorted, eventually necessitating controls on such flows. Only by advancing high-level opening-up and building a high-standard market economy simultaneously can resources be efficiently allocated in both domestic and international circulation.
The Resolution calls for promoting alignment with high-standard international economic and trade rules and harmonizing rules, regulations, management, and standards relating to property rights protection, industrial subsidies, environmental standards, labor protection, government procurement, e-commerce, the financial sector, and other areas. This requirement for openness also serves as a mandate for domestic reform. Enterprises producing export goods must upgrade in areas like intellectual property rights and labor protection to meet high international standards. Likewise, the government must reform its regulatory content and methods in areas such as industrial subsidies, environmental standards, and government procurement to align with these international benchmarks.
IV. Putting People's Livelihood First, Emphasizing Institution-Building to Ensure Shared Development Outcomes and Build Consensus on Reform While Sustaining Growth
Both theory and practice show that the period of modernization is one where social vitality and instability factors increase simultaneously, and the high growth during the early stages may, while improving overall welfare, exacerbate income disparities. A high-standard market economy must make significant strides in promoting shared development across society, as this is essential to secure public support for reforms and foster the consensus and momentum needed for reform efforts.
For example, the younger generation of the domestic migrant population has a more robust demand for fair opportunities and equitable social welfare. The reform tasks of promoting equal exchanges and two-way flows of production factors between urban and rural areas, ensuring people who have moved to cities from rural areas enjoy the same rights as registered local residents, and promoting their shared prosperity and development must be accelerated. A high-standard socialist market economy must not only promote efficient resource allocation and development but also take greater steps in building systems that ensure a more equitable and just distribution of development outcomes.
In conclusion, compared to earlier socialist market economy reforms that primarily focused on "breaking down" old systems, the construction of a high-standard socialist market economy now places greater emphasis on building new systems. It sets higher standards for the synergy and coordination of reforms and faces more complex tasks that involve managing intricate relationships and addressing shortcomings. Moving forward, there will no longer be easy tasks, only complex problems entangled with diverse interests. It is essential to uphold the Party's leadership, remain rooted in China's national realities, grasp fundamental principles, plan carefully, and persist with sustained efforts to see the reforms through to the end.
 | A guest post by
|
 | A guest post by
|
 | A guest post by
|