Efficient market, effective govt

The Decision on Major Issues Concerning Comprehensively Deepening Reforms, issued by the Third Plenary Session of the 18th Communist Party of China Central Committee on Nov 15, says "the basic economic system should evolve on the decisive role of the market in resource allocation", for which it is essential to establish a "proper relationship between the government and the market".

The change in the market's status in the economy, from playing a "basic role" to "a decisive role", is important. The Third Plenary Session of the 14th CPC Central Committee had defined the "basic role" of the market in 1993. By redefining the market's role, Chinese leaders have exhibited their determination to deepen all-round reforms.

History tells us that the key to a country's long-term development is better handling of the government-market relationship. After the end of World War II, many economies started pursuing modern development to narrow the gap with developed economies. But most of them failed to realize the goal. Only two succeeded in advancing from low-income to high-income economies; one is Taiwan and the other is the Republic of Korea. Besides, only 13 economies have completed the transition from middle-income to high-income societies since World War II.