Home » Opinion » Chinese Views
No fears over return of planned economy
Source: Xinhua |
March 12, 2011, Saturday
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Print Edition
Print Edition
FOR Western observers who say China's market economic reform has suffered a retreat to the planned economy, resolute words at the nation's annual political sessions may have eased their concerns.
"We must constantly improve the socialist market economy, and make full use of the basic role of the market in allocating resources," Premier Wen Jiabao said in the government work report on March 5.
After the government's massive stimulus package steered the Chinese economy to maintain a fast growth, China is determined to deepen the market economic reform, experts say.
After China announced the 4 trillion yuan (US$608 billion) stimulus package to combat the global financial crisis in November 2008, critics said lavish public spending showed signs of reverting to a planned economy, which underscores the governmental role and disturbs free market order.
The stimulus package, however, proved to be only a response to the crisis. Contingency measures including a loose monetary policy gradually phased out as the economy rebounded.
"China has tasted the bitterness of a planned economy. If you think the planned economy is back, that means you do not understand the real China," said Yuan Gangming, a researcher with the Chinese Academy of Social Sciences.
Under a market economy, prices of goods and services are determined by supply and demand. In a non-market economy, however, the central government sets prices.
Before China introduced market economic reform in the late 1970s, the government controlled prices of land, grain, water, electricity and other basic materials for people's living and industrial and agricultural production.
As a result of economic and social reform over the past three decades, the Chinese people are free to buy products at the prices set by market conditions. Shortages have become memories as rising productivity not only meets the needs of domestic consumers, but also consumers around the world.
The government has also been moving to reduce its weight in determining the prices of major resource products.
China adopted an oil pricing mechanism at the start of 2009 that allows the economic planning agency to adjust retail fuel prices when world crude oil prices change by more than four percent over 22 consecutive working days.
The government is considering making the mechanism more flexible by implementing price changes without the approval of the State Council, China's Cabinet.
In the 12th Five-Year Plan (2011-2015), the government vows to deepen the reform of state-owned enterprise (SOE) through listing, equity diversification and establishing corporate systems.
SOEs used to provide a lion's share of the government's fiscal revenue. They still enjoy many preferential policies and significant profits, as they are favored by many government-backed key projects.
However, they are facing more fierce competition in the emerging private economy.
"We must constantly improve the socialist market economy, and make full use of the basic role of the market in allocating resources," Premier Wen Jiabao said in the government work report on March 5.
After the government's massive stimulus package steered the Chinese economy to maintain a fast growth, China is determined to deepen the market economic reform, experts say.
After China announced the 4 trillion yuan (US$608 billion) stimulus package to combat the global financial crisis in November 2008, critics said lavish public spending showed signs of reverting to a planned economy, which underscores the governmental role and disturbs free market order.
The stimulus package, however, proved to be only a response to the crisis. Contingency measures including a loose monetary policy gradually phased out as the economy rebounded.
"China has tasted the bitterness of a planned economy. If you think the planned economy is back, that means you do not understand the real China," said Yuan Gangming, a researcher with the Chinese Academy of Social Sciences.
Under a market economy, prices of goods and services are determined by supply and demand. In a non-market economy, however, the central government sets prices.
Before China introduced market economic reform in the late 1970s, the government controlled prices of land, grain, water, electricity and other basic materials for people's living and industrial and agricultural production.
As a result of economic and social reform over the past three decades, the Chinese people are free to buy products at the prices set by market conditions. Shortages have become memories as rising productivity not only meets the needs of domestic consumers, but also consumers around the world.
The government has also been moving to reduce its weight in determining the prices of major resource products.
China adopted an oil pricing mechanism at the start of 2009 that allows the economic planning agency to adjust retail fuel prices when world crude oil prices change by more than four percent over 22 consecutive working days.
The government is considering making the mechanism more flexible by implementing price changes without the approval of the State Council, China's Cabinet.
In the 12th Five-Year Plan (2011-2015), the government vows to deepen the reform of state-owned enterprise (SOE) through listing, equity diversification and establishing corporate systems.
SOEs used to provide a lion's share of the government's fiscal revenue. They still enjoy many preferential policies and significant profits, as they are favored by many government-backed key projects.
However, they are facing more fierce competition in the emerging private economy.
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