The market playing the decisive role in allocating resources
It was decided at the Third Plenary Session of the 18th CPC Central Committee to let the market play the decisive role in allocating resources in China. It is a general rule of market economies that the market determines the allocation of resources. To improve its socialist market economy, China must follow this general rule, establish a robust market, control excessive government intervention, address insufficient government oversight, and ensure that resources are allocated in the marketplace most effectively and efficiently.
The decision to let the market play the decisive role in allocating resources will help the entire Party and the whole of society to gain a correct understanding of the roles of the government and the market. It is also conducive to transforming the growth model and government functions, and to reining in corruption and other forms of misconduct.
Of course, to develop the socialist market economy, both the role of the market and government should be brought into play. Their specific functions, however, are not quite the same. To ensure that the government plays a better role, China must exercise effective macro-level control, improve the macro-control system, perform government functions fully and properly, improve the government’s organizational structure, strengthen and improve public services, ensure fair competition, strengthen market oversight and supervision, maintain market order, spur sustainable development, promote common prosperity, ensure that the government steps in at times of market failure, and maintain macroeconomic stability.