BEIJING, Aug. 27,
2024 /PRNewswire/ -- A news report from Beijing
Review:
In 1776, Scottish philosopher and economist Adam Smith published An Inquiry Into the Nature
and Causes of the Wealth of Nations. In it, he put forward the idea
that allowing individuals to pursue their own self-interest in
commerce promoted economic prosperity.
In China, Smith is best known
for his concept of the invisible hand, a metaphor for the unseen
forces that deliver this prosperity. Since China decided to bid farewell to its planned
economy in 1978, remarkable transformation has taken place. With
the unleashing of market forces, China has turned itself into the world's
second largest economy and brought more than 700 million people out
of extreme poverty. In China's
view, however, the market is only one side of the economic coin.
The country also attaches importance to the "visible hand," or the
role of the government in regulating economic activity.
A resolution adopted at the Third Plenary Session of the 20th
Communist Party of China (CPC) Central Committee in July has
reaffirmed this approach. Focusing on the pivotal issue of
balancing the relationship between the government and the market,
the resolution makes arrangements for economic structural reform in
the next five years.
"We will see that the market plays the decisive role in resource
allocation and that the government better fulfills its role," the
resolution reads. It calls for leveling the playing field to make
economic operations more efficient. At the same time, it underlines
the need to ensure effective regulation and maintain order in the
marketplace.
The adoption of the resolution is the most important outcome of
the third plenum, Tang Fangyu, deputy head of the CPC Central
Committee Policy Research Office, said at a press conference held
to introduce the guiding principles from the plenum on July 19.
The resolution, with economic structural reform as the
spearhead, provides comprehensive plans for reforms in multiple
fields, Tang said, adding that it puts forward more than 300 major
reform measures, all of which involve reforms on the levels of
systems, mechanisms and institutions.
The resolution states that "we will lift restrictions on the
market while ensuring effective regulation, striving to better
maintain order in the market and remedy market failures. By doing
so, we will ensure smooth flows in the national economy and unleash
the internal driving forces and creativity of our society as a
whole."
"We need to correctly understand the terms 'lifting
restrictions' and 'effective regulation.' It's a challenging issue
in the governance of any country," Dong
Yu, Executive Vice President of the China Institute for
Development Planning at Tsinghua University, told Beijing Review, adding that it is not a
simple matter of "wanting both," and the key is to "grasp the
balance point of the lever in economic work and, according to the
characteristics and requirements of different areas and stages,
grasp the rhythm and intensity of the two in a targeted
manner."
The resolution, adopted by senior Party officials at the
session, codifies the governing party's vision for further
deepening of reform. Drafted based on extensive research and
consultation, it represents consensus across a wide spectrum of
Chinese society. It will therefore be internalized in Chinese
decision making at all levels.
Western countries have often championed free market capitalism
as a hallmark of the freedoms that set them apart from other
societies and forms of government. However, in recent decades, this
economic system has struggled to deliver the same level of benefits
as before. Instead, it has contributed to growing economic and
societal challenges, exemplified by increasing inequality.
Market dysfunction has long prompted economists to explore a
more nuanced approach, characterized by a combination of the
visible and invisible hands. China's exploration of a socialist market
economy gives these economists food for thought.
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SOURCE Beijing Review