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China to ease transition pains with reform dividends

(Xinhua) Updated: 2014-02-28 10:33

BEIJING - Whether or not China can sustain its unprecedented "growth miracle" after decades of rapid economic expansion is a question that has grabbed world attention.

Analysts and observers believed that the future performance of China's economy is largely dependent on whether the dividends of reform can ease the transition pains.

China has been pushing its comprehensive reform into high gear since about three months ago when the government unveiled a 60-point reform blueprint after the third?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? plenum of the 18th Central Committee of the Communist Party of China.

Most of the reform initiatives that have been carried out have followed the overall strategy of "modernizing China's governing system and governing capability," which was put forward by President Xi Jinping.

Observers believed the the underlying issue China faces in the process of modernizing China's governance system and governance capability is how to strike a balance between efficiency and equity, as well as ?between the role of the government and that of the market.

Further clarifying the boundaries of the market and the government is key to the modernization of economic governance.

Since the third plenum, a series of reform measures have been rolled out with an aim to sort out the relationship between government and market, including measures to streamline the administrative approval regime, develop a mixed-ownership economy, promote reform of state-owned enterprises and speed up the price reform of exhaustible resources.

"Whatever the law does not prohibit can be done as far as the market is concerned, while whatever the government does must be authorized by law," that is how Premier Li Keqiang summarized the relationship between government and market.

Clarifying the boundaries of the market and the government will help curtail excessive government power and enable the market to play a decisive role. It will also help unleash the power of the market in China's economic system, which has great significance for China's interest rate reform, currency reform, resource pricing reform and reforms of the state-owned enterprises.

Meanwhile, the modernization of economic governance calls for the establishment of a modern government that can meet the requirements of modern socioeconomic development.

Related reform initiatives have already been launched over the last three months, including measures to improve the budget management system, speed up taxation reform and deepen the reform of the personnel system.

Initiatives to improve macroeconomic control are the most eye-catching reform measures China has adopted, as the government has pledged that GDP figures will no longer serve as the main indicator for the promotion of officials.

Annual provincial-level legislative sessions were held between January and mid-February. Among the 31 provinces, autonomous regions and municipalities across the country, 22 local governments have lowered their GDP targets for 2014, as they now place greater emphasis on the quality of economic growth instead of sheer size.

As the government no longer judges an official simply by the growth of GDP, observers said, the government's governing capability will be further improved, and it will also ensure a freer market and more efficient allocation of resources, help unleash the vigor of domestic capital and foreign capital as well as curb industrial overcapacity.

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