Building of 'unified market' gains pace
LI MIN/CHINA DAILY
The government's guidelines for accelerating the building of a unified national market are aimed at ending local protectionism and unifying the fragmented market to remove the key hurdles to economic growth. This is part of a wide-ranging push for an effectively regulated, competitive and fully open market across the country.
The new guidelines unveiled on April 10 will allow entrepreneurs to use the advantages of China's huge domestic market, and in turn help accelerate the building of a high-standard market ecosystem, further open up the Chinese economy to the outside world, and promote in-depth reforms and high-quality development.
By ending local protectionism, a unified national market will facilitate smooth flow of goods and services throughout the country, as well as enhance the efficiency and expand the scale of the domestic market.
The key initiatives needed to achieve the goal include the implementation of a unified market access system and development of a unified market for productivity factors and resources, in order to give market access to both domestic and foreign businesses, promote fair competition, and ensure the rules governing the market are stable.
Important to have stable market rules
Since China has been working on such policies for some time, the official announcement of the policy now must be viewed from a holistic point of view.
True, China launched reform and opening-up more than four decades ago, but many elements of the planned economy days continue to affect the system. For instance, the existence of fragmented markets governed by local rules and regulations that offer protection to the local remains the norm. While progress has been made over the years in removing some of these impediments to growth, China, strictly speaking, has not yet become a unified market.
And given the changes in the environment and the readiness of internal drivers, this is the right time to launch the new policy, especially because geopolitics, the Russia-Ukraine conflict, the COVID-19 pandemic and other external factors have had an impact on China's role in international affairs, and uncertainties surround global trade.
China needs to stabilize its internal business and trade－called "internal circulation" in Chinese－to generate healthy growth, and a unified domestic market will help it do so, because it will be efficient, rules-based and open, and encourage fair competition amid pressures emanating from a complicated and grim external environment and COVID-19-related uncertainties.
As the latest move to deepen market-oriented reforms and inject more dynamism into market entities, the policy will help domestic and foreign businesses alike to achieve sustainable growth.
But to build a strong, unified domestic market, it is essential to remove market entry barriers both for domestic and foreign companies, build an open market system and promote both internal and external movement of goods and services. And thanks to its fast technological development in recent years, China can now leverage advanced technologies such as big data, artificial intelligence and blockchain to break down those barriers.
In this context, companies and localities will need to think about their respective development strategies based on their competitive advantages, and not some pre-defined positional advantages.
Level playing field for market players
Also, the government has to ensure the playing field is level and fair for all while building a unified market, for which it needs to welcome competition and ensure the rules of the game are fair and transparent. Therefore, we can expect even larger market access for private sector and foreign companies, which in turn will foster further competition and innovation in China.
The idea of a unified national market has been in the works for some time, and China began experimenting with this policy at a regional level－in clusters such as the Yangtze River Delta region, the Guangdong-Hong Kong-Macao Greater Bay Area and the Beijing-Tianjin-Hebei region. Experiences gathered from these pilot regions formed the basis for the new national policy.
Another goal of the government is to reduce the cost of transactions by facilitating market-oriented allocation of production factors and helping boost the circulation of goods and services.
Hence, we can expect China to further unify the basic systems and rules, including those for property rights protection, market access, fair competition and social credit.
Facilities and platforms in different sectors, including logistics, should be seamlessly connected across the country, and a unified market for different production factors, including land, labor, capital, technology, data and energy, needs to be established. And while unified standards for goods and services should be set, supervision, regulation and law enforcement need to be standardized, so as to break down local and regional protection barriers and promote open and fair competition.
Misunderstanding should be cleared
The representatives of some companies we (at Gao Feng Advisory Company) spoke to said that they could not quite get the reasons for and substance of the new policy. This is, at least, partly because of the way the policy has been presented. Some people also think the new policy is taking China back to its centrally planned economy days.
The fact, however, is that despite the State playing an important role under the new policy, private sector enterprises and foreign companies will largely take part in the market, with rules-based competition becoming more prevalent and overall efficiency of the entire Chinese economy improving.
Overall, a unified nationwide market will help balance resource allocation and revitalize national economic growth.
Along with the recent efforts to further open up industries, and crack down on monopolies, unfair competition and local protectionism, the new policy is expected to help develop a unified and clear approach toward both local and foreign players, and improve both domestic and global supply and value chains, thereby propelling greater global economic activity.