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Efforts for unified market signify big leap forward

By Zhao Zhong and Ao Xiang | CHINA DAILY | Updated: 2022-05-09 09:52
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CAI MENG/CHINA DAILY

The central authorities on April 10 released a guideline on accelerating the building of a unified domestic market that is open, highly efficient, rules-based and fair for all competitors, aiming to promote efficient circulation and expansion of the domestic market, foster a stable, fair, transparent and predictable business environment while reducing market transaction costs.

It also further aims to boost sci-tech innovation and industrial upgrade and cultivate new advantages for taking part in international competition and cooperation, said the guideline.

First of all, we should be clear that building such a unified domestic market by no means reflects a return to a planned economy. According to the guideline, the market should be given its full play to be the decisive factor in resource allocation, and the government afforded more leeway to play a supportive role. In building a unified domestic market, the boundaries between the market and the government should be reasonably clear and divided, and the roles of the market and the government should be clarified. The government cannot be absent, nor can it replace natural market forces.

The purpose of the government's role is to enable the market to better play its role in determining resource allocation. For example, the government helps prevent monopolies, investigates and punishes acts of unfair competition in accordance with the law and eradicates regulations and practices that violate the unified market construction in the field of bidding and procurement so that all market entities, regardless of ownership or size, can openly and fairly participate in market competition.

Works of bettering a unified property rights protection system, implementing a unified market access system, maintaining a unified fair competition system and improving a unified social credit system will not be accomplished by any sole market player, but by all market players together with the government. The government should come forward with corresponding rules for the market and implement them, accordingly, from top to bottom.

Also, many infrastructure projects, including telecommunications, logistics networks, power plants and transportation hubs normally call for large amounts of investment and feature low yields over the long run due to their strategic role in promoting livelihoods. It is thus another hard nut that the government has to crack to help players make investments or lead investments in such projects, and lay foundations for the building of a unified domestic market.

Taking a look at market reforms in recent years, efforts in building a unified domestic market are seen in the continuation and deepening of reforms for the market economy.

In 2019, a key meeting was held in Beijing which issued a guideline that highlighted better market-based resource allocation systems and mechanisms and urged promotion of the construction of a factor market system, focusing on most basic elements of economic activities, such as land, labor, capital, technology and data, and aiming to step up market-oriented factor pricing, safeguard the independent and orderly flow of factors and boost efficient and fair factor allocation.

Based on the 2019 document, in 2021, China unveiled an action plan to guide the building of a high-standard market system over the following five years. The plan proposes more than 51 specific measures covering five aspects, including basic market institutions, efficient allocation of production factors in the market, market environment and quality, high-level opening-up and an oversight mechanism of the modern market system.

Following the previous two documents, the guideline this year further clarified the goal of market-oriented reforms, and emphasized the significance of building a unified domestic market, including basic unified market system rules, market facilities, factors and resources, commodities and services markets and market supervision.

With a view to safeguarding the overall situation of market reforms and progress, the three documents are in a continuous line, thus laying a solid foundation for China's high-level socialist market economic system and dual-circulation development pattern.

Second, building such a unified domestic market is key to unleashing China's super-large market potential.

China's super-large market is a major advantage. China has a population of more than 1.4 billion, with some 400 million middle-income earners, providing abundant supply for labor, consumption and services markets. Also, seeing China's vast territory and due to the differences in resource endowments and development conditions among regions, there are various development possibilities for industries.

However, building a market merely big in scale will not necessarily reflect its strength and resilience. Many woes, such as protectionism, market segmentation and inconsistent systems and standards, will all damage the efficiency of resource allocation, hamper full play of the advantages of market scale, and thus affect people's livelihoods and the nation's social and economic development. With such concerns, the significance of comprehensively promoting market transformation from large to strong and accelerating the construction of a unified domestic market is further highlighted.

This also answers why building a unified domestic market aligns with China's dual-circulation development pattern. By forming a unified domestic market, breaking local protection and market segmentation, opening up key bottlenecks restricting economic cycles and promoting the smooth flow of commodities, factors and resources in a wider range, a more efficient domestic cycle can thus be formed. In return, when the domestic market is unified, China will be able to better participate in global competition, making domestic and global markets better connected and as a result attracting more overseas mid-to-high-end factor resources.

Last but not least, the building of a unified domestic market is a key measure in line with the strategy of promoting common prosperity. High-quality development is the foundation for promoting common prosperity. Building a unified domestic market can fully stimulate the vitality of various market players, and allow labor, capital, technology, data and other production factors to flow freely nationwide, and have them allocated to places where they can generate the greatest value, maximize production benefits and ultimately consolidate common prosperity.

In the current labor market, the free movement of labor has not yet been fully realized, as some regions still have restrictions on the settlement of migrant workers. An overall national social insurance system has not yet been formed, which affects the free movement of labor across the country to a certain extent.

To this end, the guideline calls for improving a unified and standardized human resources market system to promote the smooth flow of labor and talent across regions, and seek standard regulations at the national level to eliminate institutional factors that hinder the free flow of labor so as to truly realize the market-oriented allocation of labor factors.

The building of a unified domestic labor factor market is thus conducive to the efficient allocation of human resources nationwide. It can help reduce frictional unemployment, ease mismatches between employment structure and labor force structure, and help balance labor supply and demand. Measures in the guideline are aimed at existing structural problems, and are key to achieving adequate and higher-quality employment and promoting the free and orderly flow of labor factors, which will help increase the income of laborers and reduce income gaps.

It can be expected that the implementation of the guideline will further promote the development and improvement of the unified domestic market, and eliminate various institutional and noninstitutional factors that hinder the formation of a larger market. More market players therefore will participate more actively in market competition and fully stimulate the vitality of the market. Moves will also optimize the allocation of production factors and promote higher productivity and let each region give full play to its advantages, leading to narrower regional gaps and laying a better foundation for the formation of a new development pattern that China is seeking.

The views don't necessarily reflect those of China Daily.

The writers are Zhao Zhong, an associate dean and a professor of economics at the School of Labor and Human Resources, the Renmin University of China, and Ao Xiang, an expert with Fuzhou Talent Development Group.

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