In recent years, some Western media outlets have often speculated about China's reforms 'stalling' or even 'backsliding.' Phrases like 'state advances and private sector retreats,' 'private sector exit,' and 'new state-private partnerships' have been rampant. Against this backdrop, the measures for deepening reforms outlined at the third plenary session of the 20th Central Committee of the Communist Party of China (CPC), which concluded on July 18, have garnered significant attention.
The core issue in the reform of China's socialist market economy system is how to handle the relationship between the state and the market. A communique adopted at the session stated that 'a high-standard socialist market economy will provide an important guarantee for Chinese modernization. We must better leverage the role of the market, foster a fairer and more dynamic market environment, and make resource allocation as efficient and productive as possible. 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.'
State-owned, private and foreign-funded enterprises all make enormous and indispensable contributions to China's economic development. As President Xi Jinping stressed, 'We will unswervingly consolidate and develop the public sector and unswervingly encourage, support, and guide the development of the non-public sector. We will ensure that economic entities under all forms of ownership have equal access to factors of production in accordance with the law, compete in the market on an equal footing, and are protected by the law as equals, thus enabling entities under different forms of ownership to complement each other and develop side by side. We will build a unified national market and refine the systems underpinning the market economy.'
Innovation by State-Owned Enterprises
China's state-owned enterprises (SOEs) have long faced criticisms of being 'big but not strong enough' and 'big but not good enough.' With the accelerated development of a new round of technological revolution and industrial transformation, enhancing the competitiveness, innovation, influence and resilience of the state-owned economy is a pressing issue for China. To this end, China has placed independent innovation at the core and maximized the implementation of policies incentivizing innovation. In 2023, China's central SOEs invested 1.1 trillion yuan ($137.8 billion) in research and development.
Since the 18th National Congress of the CPC in 2012, SOEs have pursued breakthroughs and innovation in key technologies and achieved significant technological advancements. For instance, Shenzhen Jinzhou Precision Technology Co., affiliated to China Minmetals, has developed a milling cutter with a diameter of 0.01 millimeter, about one-eighth the thickness of a strand of hair. This is the milling cutter with the smallest diameter in the world and can be used to mill 56 Chinese characters on a single grain of rice.
Moreover, China has been promoting modern corporate systems in SOEs to bolster their vitality from an institutional perspective. Since 2013, the restructuring and reorganization of SOEs have attracted non-state investments of over 2.5 trillion yuan. Currently, mixed-ownership enterprises account for over 70 percent of central enterprises and over 54 percent of local SOEs. Many enterprises have improved corporate governance, increased operational standards, substantially reformed mechanisms, and significantly enhanced vitality and efficiency through mixed-ownership reform.
Timely Relief for Private Enterprises
Private enterprises are a vital force for China's high-quality development. However, some private enterprises still face heavy tax burdens and a lack of strong policy support. At a meeting, President Xi Jinping once compared such problems to 'three mountains' and 'three gates,' with the 'three mountains' being 'the iceberg in markets, the steep mountain in financing, and the volcano in transformation,' while the 'three gates' are 'the glass door, the spring door, and the revolving door,' and they should all be removed.
Reference(s):
cgtn.com
