Leveraging the Leading Role of Economic Reform and Building a High-Standard Socialist Market Economy

The recent third plenary session of the 20th Central Committee of the Communist Party of China (CPC) in July 2024 stands as a pivotal meeting on the new journey in the new era that began in 2012. At this session, the CPC firmly upheld reform and opening up and took further steps for deepening comprehensive reform to advance Chinese modernization. The Resolution of the Central Committee of the Communist Party of China on Further Deepening Reform Comprehensively to Advance Chinese Modernization (hereinafter “the Resolution”) represents not only a continuation of our efforts to further reform since the third plenary session of the 18th CPC Central Committee in 2013, but also the opening of a new chapter in advancing Chinese modernization on the new journey in the new era. The Resolution provides insights on freeing our minds to embrace change, offers strategies for upholding fundamental principles and breaking new ground in response to change, and demonstrates CPC’s courage in meeting difficulties head-on to steer change in a favorable direction. It represents an overall plan and call to action that will enable us to comprehensively advance broader and deeper reform in the new era, as well as a programmatic document to guide our reform endeavors.

I. Fully grasping President Xi Jinping’s new ideas, viewpoints, and conclusions on furthering comprehensive reform and the profound significance of deepening reform for Chinese modernization 

Since the 18th CPC National Congress in 2012, President Xi Jinping has taken a personal hand in leading, planning, and advancing the reform in all sectors. He has developed new theories to guide innovations in reform, articulated the mission and direction of reform as well as its objectives, strategies, drivers, and methods, and put forward new ideas, viewpoints, and conclusions on further reform across the board. He has provided well-conceived answers to the major theoretical and practical questions of the new era, such as the guidelines to uphold, the path to follow, the reason why we should comprehensively deepen reform, and the way to do so. The tremendous power of these truths and practices has been fully demonstrated by their capacity to guide new endeavors and new transformations. They constitute a powerful weapon for our efforts to further comprehensive reform. 

On the new journey, it is vital that we respond to complex developments both at home and abroad, adapt to the new round of scientific and technological revolution and industrial transformation, and live up to the expectations of the people. In the face of these imperatives, the Central Committee with Xi Jinping at its core has chartered our course and given greater prominence to reform, formulating a grand blueprint for further comprehensive reform to advance Chinese modernization.

Understanding furthering reform as a move to take the initiative in our hands and pooling the strength needed to see reform through on the new journey of Chinese modernization 

As Chinese modernization has been advanced continuously through reform and opening up, it will surely embrace broader horizons through further reform and opening up. The Resolution provides an in-depth analysis of the new circumstances and challenges we face in advancing Chinese modernization. It sets out six essential reasons for further reform, thus elucidating its significance on the new journey of building a great country and moving toward national rejuvenation. It states that advancing reform is essential for upholding and improving the system of socialism with Chinese characteristics and modernizing China’s system and capacity for governance; for putting the new development philosophy into practice and better adapting to the evolution in the principal challenges in Chinese society; for adhering to a people-centered approach to see that the gains of modernization benefit all our people fairly; for responding to major risks and challenges and ensuring steady and sustained progress in the cause of our Party and our country; for promoting a global community of shared future and winning the strategic initiative amid accelerating global changes unseen in a century; and for further advancing the great new project of Party development in the new era and making our Marxist party stronger. 

These six essential reasons demonstrate the CPC’s sound grasp of the context for further reform to advance Chinese modernization and make it clear that further reform is both the call of the times and the aspiration of our people. They also reflect the firm resolve and determination of the CPC Central Committee led by Xi Jinping to carry reform through to the end.

Grasping the overall requirements for furthering reform and resolutely working toward the overall objectives for modernizing China's system and capacity for governance 

At its 20th National Congress in 2022, the CPC declared that in the new era, its central task is to lead the Chinese people in a concerted effort to realize the Second Centenary Goal of building China into a modern socialist country and to advance the rejuvenation of the Chinese nation through Chinese modernization. Making reform plans and arrangements with a focus on the central task has constituted a successful experience for our Party in leading reform and opening up. At a new historic juncture, the Resolution clearly defines the overall requirements for further comprehensive reform, including the theme, overall objectives, and guiding principles. The Resolution outlines strategic measures for further reform based on the theme of advancing Chinese modernization. The overall objectives it presents align with both the general goals for comprehensive reform proposed at the third plenary session of the 18th CPC Central Committee as well as the strategic plans set out at the 20th CPC National Congress. The guiding principles, meanwhile, address several major issues regarding further reform, such as who should lead it, who should benefit, what should be reformed, and how. Grounded in the central tasks of our Party and our country in the new era, these major conclusions fully embody the worldview, methodology, and the underlying positions, viewpoints, and methods of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. By defining the mission, direction, objectives, and principles for further reform, they create a clear, well-conceived, practical, and feasible vision for socialist modernization. 

Understanding the methodology for furthering reform and grasping the features of reform in the new era 

As reform and opening up constitute an unprecedented undertaking, it is vital to apply the right methodology in our exploration of the path forward. The right approach will deliver twice as much with half the effort, while the wrong approach will have the opposite effect or even worse. Since the launch of reform and opening up in 1978, and especially the comprehensive reform in the new era, the CPC has built up a rich and systematic methodology for comprehensive reform. As the Resolution states, our Party will channel greater energy into making reforms integrated, focused, and effective. This commitment, which has resulted from a thorough analysis of the features of reform in this era, marks the enrichment and evolution of our reform methodology. 

Understanding the systematic plans for comprehensive reform and working together for progress in our reform endeavors 

It is important to grasp the primary issues in comprehensive reform and their principal aspects. In this regard, the Resolution highlights the following seven issues: building a high-standard socialist market economy, advancing whole-process people’s democracy, developing a strong socialist culture, improving the people’s quality of life, building a Beautiful China, advancing the Peaceful China Initiative to a higher level, and improving CPC’s capacity for leadership and long-term governance. In concentrating on these issues, we are committed to being both problem- and goal-oriented. Spanning the economic, political, cultural, social, and ecological spheres, they identify the main areas of focus in further reform as well as the major areas and links for advancing Chinese modernization. Progress in these priorities is sure to drive broader advancements. 

II. Understanding the measures for further reform and leveraging economic reform as the spearhead for the overall reform 

The economy is the main focus of the endeavor to further reform. It is important that we accurately grasp the strategic plans for economic reform proposed at the third plenary session in July 2024. Based on the goal of building a high-standard socialist market economy by the year 2035, we will regard economic structural reform as the spearhead and greater social fairness and justice and increased wellbeing of the people as our ultimate objectives and channel greater energy into making our reforms integrated, focused, and effective. With this, we will be able to advance the reform.

Promoting the common development of economic entities under all forms of ownership and further simulating the vitality of enterprises 

Both the public and private sectors are vital components of the socialist market economy and the bedrock of China’s economic and social development. To uphold and fulfill the commitments to the public and non-public sectors, the Resolution focuses on deepening reform of state capital and state-owned enterprises (SOEs) to enhance their core functions and on helping to foster a favorable environment and creating more opportunities for the development of the non-public sector. We envision that state and non-public entities will both complement each other and develop side by side. 

To deepen reform of state capital and SOEs, we will enhance and refine the top-level design for management in the state-owned sector. The sector’s layout and structure will be improved to steer state capital toward major industries and key fields that are vital to national security and serve as the lifeblood of the national economy. While promoting independent operation of natural monopoly businesses in key sectors, we will advance market-oriented reforms in the competitive areas of these sectors. We will keep working to help state capital and SOEs become stronger, better, and bigger, so as to steadily enhance the material and political underpinnings of Chinese socialism. 

We will continue to implement principles and policies that help foster a favorable environment and create more opportunities for the development of the non-public sector. We will ensure that economic entities under non-public and all other 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. To this end, we will keep improving the legal, policy, and market environment for the development of the non-public sector. We will push ahead with legislation for the non-public sector and put in place long-term mechanisms to address prominent issues affecting non-public entities, such as market access, financing, and late payments. With concrete and practical steps, we will see that the pressing difficulties and problems that concern economic entities most are resolved. 

We will improve the modern Chinese corporate system with a view to giving full play to the strengths of the system of Chinese socialism. We will ensure that all types of enterprises operate under a sound modern corporate system that features well-defined property rights, clear duties and responsibilities, and the separation of government administration from enterprise management and bring corporate governance under effective regulation. We will vigorously promote entrepreneurship and strive to foster a greater number of world-class enterprises. 

Building a high-standard socialist market economy and ensuring smooth flows in the national economy

Building a high-standard socialist market economy is a major reform task. The Resolution sets out plans for developing such a market in order to boost efficiency and for improving macroeconomic governance systems to ensure an effective government. Based on this two-pronged approach, we will take steps to both lift market restrictions and ensure effective regulation. 

To build a unified national economy, we will work to eliminate all forms of local protectionism and market segmentation. We will enhance the binding force of fair competition review and abolish regulations and practices that impede the development of a unified national market and fair competition. While bringing local regulations and institutions for attracting investment under regulation, we will explore new channels and models for local governments to attract investment, so as to ensure its high-quality development. We will improve the institutions and rules for production factor markets, push ahead with reforms for market-based allocation of production factors, and remove all institutional obstacles hindering the free movement of factors. We will expand the scope of market-based production factor allocation by boosting the development of production factor markets and related institutions. These steps will ensure that prices are determined by the market, factors can flow in an independent and orderly manner, and allocation is both fair and efficient. In-depth trials of reforms on the market-based allocation of production factors will also be continued. 

We will refine the systems underpinning the market economy, improving property rights protection, information disclosure, market access, credit-rating based supervision, and other systems. We will strengthen the legal safeguards for the market economy, ensuring equal protection of property rights for entities under all forms of ownership in accordance with the law and bolstering protection of intellectual property rights. We will refine the market access system to ensure greater accessibility for new forms of business and new sectors. Improvements will be made to the macroeconomic governance system. With the new five-year plan for economic and social development serving as the entry point, we will improve the systems of national strategic planning, policy coordination, and national economic and social development planning. Further steps will be also taken to improve the quality and effectiveness of evaluations to determine the consistency of the macro policy orientation. To this end, non-economic policies, as well as economic policies, will be included within the scope of evaluation, so as to avoid mistakes arising from fallacies of both composition and division. 

Creating efficient links between reform and development to shape new growth drivers and strengths 

High-quality development is the primary task in building a modern socialist country. In line with the commitment to steering reform using the new development philosophy, the Resolution states that the incentive and constraint mechanisms for promoting high-quality development will be improved. Notably, it also creatively proposes to improve the institutional mechanisms for developing new quality productive forces in line with local conditions. These moves will open the way for new growth drivers and strengths that will provide fresh impetus for high-quality development. 

Efforts to develop new quality productive forces in line with local conditions must be focused on high technology, high performance, and high quality. On the one hand, we need to channel energy into developing the “new” by accelerating the formation of relations of production that are more compatible with new quality productive forces through reform, establishing mechanisms for ensuring funding increases for industries of the future, and guiding the healthy and orderly development of emerging industries. On the other hand, we also need to transform the “old” by improving the institutional mechanisms for the optimization and upgrading of traditional industries. 

We will improve the systems and mechanisms for developing a modern industry. We will move faster to establish institutions and mechanisms for promoting the development of the digital economy, refine policies for developing digital industry and transforming traditional industries with digital technologies, and promote the integrated development of producer services. We will improve the mechanisms for accelerating the diversified development of consumer services and reform the integrated transportation system. 

The green transformation of our growth model will be accelerated. We will improve the mechanisms for green development, issuing action plans for energy conservation and carbon reduction in key industries and improving incentive mechanisms for eco-friendly consumer spending. We will deliver steady progress in trials for carbon peaking, move faster to plan and develop a new type of energy system, and establish a carbon emissions statistics and accounting system. All this will see us actively and prudently progressing toward our goals for peak carbon emissions and carbon neutrality. 

Promoting full integration between reform and innovation to generate intrinsic momentum for innovation 

Education, science and technology, and human resources function as basic and strategic underpinnings for Chinese modernization. Targeting the global frontiers of science and technology, the development of the economy, the major needs of the country, and the health and safety of our people, the Resolution lays out coordinated plans for advancing the integrated reform of systems and mechanisms relating to education, science, technology, and human resources, with the aim of creating multiplier effects that will drive high-quality development and boost the overall performance of our country’s innovation system. 

Comprehensive education reform will be deepened, with the aim of turning China’s large education system into one of the world’s best. To move faster in developing high-quality education, we will advance coordinated reforms in student training methods, school operation models, management systems, and support mechanisms. To optimize the allocation of educational resources across different regions, we will align the supply of basic public education services with demographic changes. 

In pursuing deeper scientific and technological structural reform, we will focus on accelerating scientific and technological innovation and achieving a high level of self-reliance and strength in science and technology. We will refine the mechanisms under which major scientific and technological innovation projects are organized. To boost China’s strength in strategic science and technology, we will mount a concerted push for breakthroughs in core technologies in key fields. We will speed up the systematic planning of major scientific and technological infrastructure, reinforce the principal role of enterprises in innovation, and promote closer collaboration between industries, universities, research institutes, and end-users. 

In advancing institutional reforms for talent development, we will make it a priority to build a contingent of personnel with expertise of strategic importance. We will grant more say to employers in this area, create a more accommodating environment for talent development, and speed up efforts to create effective mechanisms for training, utilizing, assessing, serving, supporting, and incentivizing talent. Effective steps will also be taken to resolve the structural problems of supply-demand mismatch between talent development and scientific and technological innovation. 

Promoting integrated urban-rural development and coordinated regional development and ensuring more balanced development through reform 

Integrated urban and rural development is essential to Chinese modernization. The Resolution states, “We must pursue coordinated progress in new industrialization, new urbanization, and all-around rural revitalization, facilitate greater urban-rural integration in planning, development, and governance across the board, and promote equal exchanges and two-way flows of production factors between urban and rural areas, so as to narrow the disparities between the two and promote their shared prosperity and development.” 

We need to improve the institutional mechanisms for integrated urban-rural development. With an emphasis on both urban and rural areas, we will foster a new pattern of urban-rural integrated development. From an urban perspective, we will improve the institutions and mechanisms for advancing new urbanization and put in place mechanisms for fostering positive interactions between industrial upgrading, population concentration, and urban development. We will accelerate the process of granting permanent urban residency to people who have moved to cities from rural areas. We will see that eligible people moving from rural areas enjoy the same rights as registered local residents. We will protect the lawful rights and interests of rural residents applying for permanent urban residency to alleviate any concerns they have. From a rural perspective, we will consolidate and improve the basic rural operation system. We will move forward with well-organized trials to extend rural land contracts by another 30 years upon the expiration of the second-round contracts and deepen the reform to separate the ownership rights, contract rights, and management rights of contracted land. The supporting systems to strengthen agriculture, benefit farmers, and enrich rural areas will be improved, and the investment mechanisms for rural revitalization will be refined, in order to boost rural incomes through a combination of measures. 

We will improve the mechanisms for implementing the coordinated regional development strategy. We will refine the policy frameworks for promoting coordinated development between the western, northeastern, central, and eastern regions. In line with major regional strategies such as the coordinated development of the Beijing-Tianjin-Hebei region, the integrated development of the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area, we will give full play to the comparative advantages of each region to promote the rational flow and efficient concentration of production factors of all types. We will improve integrated regional development mechanisms and build new mechanisms for cooperative development across administrative divisions. These steps will see us developing a regional economic layout and a territorial space system characterized by complementarity between different regions and territorial spaces. 

Promoting the mutual progression of reform and opening up and propelling reform and development through further opening up 

Opening up is a defining feature of Chinese modernization. The Resolution proposes a series of measures aimed at enhancing the synergy between domestic and international markets and resources and shaping new advantages for developing a higher-standard open economy. These moves will serve to further underscore China's role on the world stage as a devoted practitioner of open development, an important promoter of reform in the global economic governance system, and an advocate and leader of building a global community of shared future. 

We will steadily expand institutional opening up, promoting alignment with high-standard international economic and trade rules and harmonizing rules, regulations, management, and standards relating to major areas such as property rights protection and industrial subsidies. To seize the initiative in opening up, we will actively participate in the reform of global economic governance and provide more global public goods. We will foster a first-rate business environment that is market-oriented, law-based, and internationalized and make stronger efforts to attract and utilize foreign investment. The catalog of encouraged industries for foreign investment will be expanded, the negative list for foreign investment will be reduced as necessary, and all market access restrictions on foreign investment in the manufacturing sector will be removed. We will promote more expansive opening up in sectors such as telecommunications, the internet, education, culture, and medical services in a well-conceived way. National treatment will be ensured for foreign-funded enterprises, and we will keep working to make it more convenient for foreigners to visit or live in China and to consolidate foreign investors’ confidence in realizing growth in China. 

We will optimize the regional layout for opening up. Leveraging the regional features and development strengths of the eastern, central, western, and northeastern regions, we will move faster toward all-around opening up through links running eastward and westward, across land, and over sea. The development of the Hainan Free Trade Port will be accelerated. Harnessing the institutional strengths of the One Country, Two Systems policy, we will work to improve relevant mechanisms to see Hong Kong and Macao playing a greater role in China’s opening to the outside world. We will advance integrated cross-Strait development. 

We will improve the mechanisms for high-quality cooperation under the Belt and Road Initiative and work to implement the eight steps for supporting high-quality development of the Belt and Road. To ensure solid progress toward high-quality development, we will carry out both major signature projects and “small but beautiful” public welfare projects.

Ensuring and enhancing the people’s wellbeing in the course of development and taking further steps to increase the sense of fulfillment, happiness, and security people derive from reform 

Ensuring and enhancing the people’s wellbeing in the course of development is one of the major tasks of Chinese modernization. In the Resolution, the CPC adheres to a people-centered approach and regards the people's aspirations for a better life as the goal it is striving for. To resolve the most practical problems of the greatest and most direct concern to the people, it details reforms in key areas such as income distribution, social security, healthcare, elderly care, and childcare. 

To improve income distribution, we will implement a range of plans, including those to boost the incomes of low-income earners, expand the size of the middle-income group, and regulate excessive incomes. We will focus on developing an institutional framework under which primary distribution, redistribution, and tertiary distribution are well coordinated and mutually complementary. We will work to raise the share of personal income in the distribution of national income, give more weight to work remuneration in primary distribution, steadily reduce income disparities, and continue to enhance people’s capacity for consumption. We will refine long-term mechanisms for expanding consumption, reduce relevant restrictions, and explore avenues for boosting public spending as necessary. Efforts will be made to actively promote the debut economy and improve the incentive mechanisms for eco-friendly consumer spending. 

The social security, medical, and healthcare systems will be further reformed. We will establish a sound social security system to serve people in flexible employment, rural migrant workers, and those in new forms of employment. We will weave a stronger social security net to address people’s wellbeing concerns. We will also do more to increase the availability of quality medical resources and see that such resources are channeled toward the community level in a continuing effort to ensure equitable access to quality healthcare and better meet people’s healthcare needs. 

We will improve the systems for supporting population development and providing related services. In response to population aging and the declining birth rate, a sound system will be instituted to provide full life-cycle population services to all. Focused on bringing down the costs of childbirth, parenting, and education, we will refine policies for boosting the birth rate. We will make greater efforts to develop a public-benefit childcare service system and boost the supply of basic elderly care services to guarantee access to childcare and elderly care. 

Balancing development and security imperatives and reinforcing the systems for guarding against and defusing major risks to security 

National security provides a pivotal foundation for ensuring steady and sustained progress in Chinese modernization. The Resolution emphasizes the importance of building up the national security system, highlighting the need to ensure that high-quality development and greater security reinforce each other. Security is a consistent feature throughout the Resolution; it proposes a series of reform measures in areas such as the economy, science and technology, society, and national defense to create a dynamic balance and complementarity between development and security. Fully applying a holistic approach to national security, we will improve the legal, strategy, and policy systems for national security, the systems for safeguarding security in key sectors, and the coordination and command systems for major projects. Furthermore, we will conduct forward-looking research and develop institutional frameworks to address new security risks arising from geopolitical shifts and technological breakthroughs.

Zheng Shanjie is Minister and Secretary of the CPC Leadership Group, National Development and Reform Commission. 

(Originally appeared in Qiushi Journal, Chinese edition, No. 15, 2024)