Balancing the Relationship between an Effective Market and a Proactive Government

Deeply exploring, profoundly grasping, and skillfully applying the laws governing socialist economic construction is an important prerequisite for doing economic work well in a complex and changing environment. The Central Economic Work Conference proposed that in practice, we continuously deepen our understanding of the regular patterns of economic work. The necessity of balancing the relationship between an effective market and a proactive government to form an economic order that is both “able to unleash vitality” and “able to maintain control” is one important principle. This incisive thesis is a valuable experience formed by our Party, based on the new conditions of the era, in continuously advancing theoretical, practical, and institutional innovation in the economic field. It provides important epistemological and methodological support for doing economic work well in the current and future periods.

深入探索、深刻把握和娴熟运用社会主义经济建设规律，是在复杂多变的环境中做好经济工作的重要前提。中央经济工作会议提出，实践中，我们不断深化对经济工作的规律性认识。必须统筹好有效市场和有为政府的关系，形成既“放得活”又“管得住”的经济秩序，就是重要一条。这一精辟论断是我们党立足新的时代条件持续推进经济领域理论创新、实践创新、制度创新形成的宝贵经验，为做好当前和今后一个时期的经济工作提供了重要的认识论和方法论支撑。

The Core Issue of Economic System Reform

经济体制改革的核心问题

Correctly handling the relationship between the government and the market is the core issue of China’s economic system reform. Since reform and opening up, China has continuously expanded and deepened its understanding of the relationship between the government and the market in practice, emphasizing both leveraging the strengths of the market economy and highlighting the superiority of the socialist system. The development process of China’s economic system reform is also a practical process of exploring the relationship between the government and the market.

正确处理政府和市场的关系是我国经济体制改革的核心问题。改革开放以来，我国一直在实践中拓展和深化对政府和市场关系的认识，既注重发挥市场经济的长处，又强调发挥社会主义制度的优越性。我国经济体制改革的发展过程，也是探索政府和市场关系的实践历程。

In the highly centralized traditional planned economic system, the government replaced the market, playing the entire role in resource allocation. While this could effectively mobilize resources and rapidly advance strategies like prioritizing heavy industry development, it also suffered from drawbacks such as low resource allocation efficiency. In 1978, the Third Plenary Session of the 11th Central Committee of the CPC [1]1 The Third Plenary Session of the 11th Central Committee of the CPC, held in December 1978, marked the beginning of China’s reform and opening-up policy, shifting the focus to economic development. lifted the curtain on reform and opening up. The basic direction of economic system reform at that time was to continuously inject market-oriented factors into the traditional economic system, thereby better leveraging the advantages of market mechanisms in resource allocation. As market mechanisms gradually developed and matured, how to handle the relationship between the government and the market became the key link determining the orientation of economic system reform. In 1992, the 14th National Congress of the CPC [2]2 The 14th National Congress of the CPC, held in October 1992, formally established the goal of building a “socialist market economy.” established the reform goal of building a socialist market economy, proposing that the market should play a basic role in resource allocation under the state’s macroeconomic regulation and control. Since the 18th National Congress of the CPC [3]3 The 18th National Congress of the CPC, held in November 2012, marked the start of the Xi Jinping era and the New Era of socialism with Chinese characteristics., our Party has further explored effective paths for combining the basic socialist system with the market economy. The Third Plenary Session of the 18th Central Committee of the CPC [4]4 The Third Plenary Session of the 18th Central Committee of the CPC, held in November 2013, adopted a comprehensive plan for deepening reforms, including the landmark decision to let the market play a “decisive” role in resource allocation. proposed that the market should play a decisive role in resource allocation and the government should play its role better. The Fifth Plenary Session of the 19th Central Committee of the CPC [5]5 The Fifth Plenary Session of the 19th Central Committee of the CPC, held in October 2020, adopted proposals for the 14th Five-Year Plan (2021-2025). proposed promoting a better combination of an effective market and a proactive government. After more than 40 years of reform and development, the operational space of market mechanisms has been greatly expanded, and the decisive role of the market in resource allocation has become increasingly prominent. The profound transformation of the economic system has greatly stimulated market vitality and promoted the sustained and rapid growth of China’s economy.

在高度集中的传统计划经济体制中，政府取代了市场，在资源配置中发挥全部作用。这虽然能够有力地动员资源，快速推进重工业优先发展战略等，但也存在资源配置效率低下等弊病。1978年，党的十一届三中全会拉开了改革开放大幕。当时经济体制改革的基本方向是向传统经济体制中持续注入市场化因素，从而更好地发挥市场机制在配置资源上的优势。当市场机制逐步发育成长之后，如何处理政府和市场关系便成为决定经济体制改革取向的关键环节。1992年，党的十四大确立了建立社会主义市场经济体制的改革目标，提出要使市场在社会主义国家宏观调控下对资源配置起基础性作用。党的十八大以来，我们党进一步探索社会主义基本制度与市场经济相结合的有效路径。党的十八届三中全会提出要使市场在资源配置中起决定性作用和更好发挥政府作用。党的十九届五中全会提出要推动有效市场和有为政府更好结合。经过40多年的改革发展，市场机制的运行空间得到极大扩展，市场在资源配置中的决定性作用日益凸显。经济体制的深刻变革极大地激发了市场活力，推动了我国经济持续快速增长。

The Third Plenary Session of the 20th Central Committee of the CPC [6]6 The Third Plenary Session of the 20th Central Committee of the CPC, held in July 2024, focused on further deepening reform comprehensively to advance Chinese-path modernization., while emphasizing the necessity of better leveraging the role of market mechanisms, proposed achieving an order that is both “able to unleash vitality” and “able to maintain control.” The 2024 Central Economic Work Conference further elevated “balancing the relationship between an effective market and a proactive government” to a regular pattern understanding for doing economic work. This is our Party’s latest theoretical achievement concerning the relationship between the government and the market. To balance the relationship between an effective market and a proactive government in economic work, we must advance around the goal of being “both able to unleash vitality and able to maintain control,” and grasp the key of “letting the market play a decisive role in resource allocation and letting the government play its role better.”

党的二十届三中全会在强调必须更好发挥市场机制作用的同时，提出要实现既“放得活”又“管得住”。2024年中央经济工作会议进一步把“统筹好有效市场和有为政府的关系”上升为做好经济工作的规律性认识。这是我们党关于政府和市场关系的最新理论成果。在经济工作中统筹好有效市场和有为政府的关系，必须围绕“既‘放得活’又‘管得住’”这一目标来推进，抓住“使市场在资源配置中起决定性作用和更好发挥政府作用”这个关键来展开。

The Organic Unity of an Effective Market and a Proactive Government

有效市场和有为政府有机统一

For a long time, people have regarded the government’s “visible hand” and the market’s “invisible hand” as mutually exclusive, opposing poles. In the traditional Western economics system, the basic function of the government was limited to “night watchman,” believing that economic operation and development issues should be entirely left to the market; while the traditional planned economics school advocated replacing the market with the government to allocate resources. Foreign explorations of the relationship between the government and the market have long oscillated between the two poles of “laissez-faire” and “control.”

长期以来，人们将政府这只“看得见的手”和市场这只“看不见的手”视为互斥、对立的两极。在传统的西方经济学体系中，政府的基本功能仅限于“守夜”，认为经济运行与发展问题应当完全交给市场来处理；而传统的计划经济学派则主张用政府取代市场来配置资源。国外有关政府和市场关系的探索长期在“放任”与“统制”两极之间摇摆。

The Chinese practical experience of the relationship between the government and the market has broken through both the dogmas of mainstream neoclassical economics and what traditional political economy theory can summarize. In its practical exploration, China has been committed to finding the best point of integration between market functions and government actions, fully leveraging the advantages of both the market and the government, forming a pattern where the “invisible hand” and the “visible hand” are organically unified, exerting force in coordination, and promoting each other. On one hand, where the market can function effectively, the government should streamline administration, delegate power, loosen controls, and provide support, refraining from intervention. On the other hand, where the market cannot function effectively, the government should proactively fill the gap, resolutely managing what needs to be managed, managing it well and to a high standard.

政府和市场关系的中国实践经验，既突破了主流新古典经济学的教条，也不是传统政治经济学理论所能概括的。中国在实践探索中一直致力于寻找市场功能和政府行为的最佳结合点，切实把市场和政府的优势都充分发挥出来，形成“看不见的手”和“看得见的手”有机统一、协同发力、相互促进的格局。一方面，凡属市场能发挥作用的，政府要简政放权，松绑支持，不要去干预；另一方面，凡属市场不能有效发挥作用的，政府应当主动补位，该管的要坚决管，管到位、管出水平。

The advantage of the market is mainly reflected in its “effectiveness.” China’s reform and development practice proves that market allocation of resources is the most efficient form. The key reason why the planned economy was unsustainable was that it “eliminated” the market, distorted incentives, and led to low resource allocation efficiency. In contrast, a high-level, mature market economy system can, through mechanisms such as supply and demand, competition, and prices, stimulate the endogenous driving forces and innovation vitality inherent in the vast number of business entities and the people, encouraging people to fully engage in creative exploration in economic activities, thereby improving production efficiency and resource allocation efficiency, continuously creating wealth, and promoting the development of productive forces. The more vibrant the market, the more conducive it is to achieving optimal resource allocation efficiency and maximizing benefits, and to promoting high-quality development.

市场的优势主要体现在“有效”。中国改革发展的实践证明，市场配置资源是最有效率的形式。计划经济之所以不可持续，关键在于“消灭”了市场，扭曲了激励，导致资源配置效率低下。相较而言，一个高水平的、成熟的市场经济体制，可以借由供求、竞争、价格等机制，激发蕴藏在广大经营主体和人民群众之中的内生动力和创新活力，鼓励人们在经济活动中充分进行创造性探索，从而提高生产效率和资源配置效率，不断创造财富，推动生产力发展。市场越是有活力，就越有利于实现资源配置效率最优化和效益最大化，有利于推动高质量发展。

The key role of the government lies in being “proactive.” Theoretical advances in modern economics indicate that the government must not only effectively remedy market failures but also fully enhance market functions. At the practical level, this means that a proactive government must better maintain market order, remedy market failures, and at the same time respect market laws and promote the sound operation of the market.

政府的作用关键在于“有为”。现代经济学的理论进展表明，政府既要有力弥补市场失灵，又要充分增进市场功能。在实践层面，这就意味着有为政府必须更好维护市场秩序、弥补市场失灵，同时还要尊重市场规律，促进市场良好运转。

Macroeconomic regulation is an important economic function of the government. Facing economic fluctuations, the government must enrich and improve its policy toolbox, adopt scientific and effective regulatory policies to stabilize market expectations and aggregate social demand, and maintain macroeconomic stability. This is a basic consensus of modern macroeconomics. The government must also play a role in shaping and creating markets, providing various types of infrastructure and public services that promote the development of market mechanisms, making the government a support and guarantee for the operation of market mechanisms. Furthermore, promoting scientific and technological self-reliance and self-strengthening, maintaining fairness and justice, ensuring national security, and achieving harmonious coexistence between humans and nature are also areas where the government needs to be proactive and indispensable.

宏观调控是政府的重要经济职能。面对经济波动，政府必须充实完善政策工具箱，采用科学有效的调控政策稳定市场预期和社会总需求，维护宏观经济稳定。这是现代宏观经济学的基本共识。政府还要发挥塑造和创造市场的功能，提供促进市场机制发育的各类基础设施和公共服务，使政府成为市场机制运行的支撑和保障。此外，促进科技自立自强、维护公平正义、确保国家安全、实现人与自然和谐共生等，也是政府需要积极作为、不可缺位的领域。

It should be pointed out that the relationship between the government and the market evolves dynamically with changes in the stage of economic development. In the past, China faced a situation where the market system was underdeveloped, structural distortions were severe, and factor resources were scarce; in specific periods, it also suffered deliberate suppression and containment by some developed economies. To achieve faster economic development than developed economies while lagging behind in many areas required the government to play an important, even dominant, role in mobilizing resources. However, as the market economy system has gradually improved and China’s economy has grown strongly, various distortions caused by excessive government intervention have become obstacles to achieving high-quality development. In the new stage of development, the focus of exploring the relationship between the government and the market needs to shift to addressing issues such as imperfect market mechanisms, excessive government intervention, and inadequate regulation and governance.

需要指出的是，政府和市场之间的关系是随着经济发展阶段的变化而动态演进的。过去，我国曾面临着市场体系发育程度不高、结构性扭曲严重、要素资源稀缺的局面；在特定时期还遭受一些发达经济体的刻意打压与遏制。想要在处处落后的情况下实现比发达经济体更快的经济发展，就要求政府在动员资源方面发挥重要甚至是主导作用。但随着市场经济体制逐步健全，我国经济强劲增长，政府过度干预导致的各种扭曲就成为实现高质量发展的障碍。在新发展阶段，探索政府和市场关系的重点需转向应对市场机制不完善、政府干预过多和监管治理不到位等问题。

Resolutely Reverse Government Function Misplacement, Overreach, and Absence

坚决扭转政府职能错位越位缺位

High-quality development is the absolute principle of the New Era. Promoting high-quality development requires the coordinated efforts of both the government and the market hands. Achieving the multiple goals embedded in high-quality development, such as fairness, security, harmony, and sustainability, all require better performance of government functions and solving the problems of excessive government intervention and inadequate regulation as a prerequisite; relying solely on spontaneous market adjustment cannot achieve this. Building a high-level socialist market economy system urgently requires solving problems such as an imperfect market system, which also requires the government to play a better role in protecting property rights, optimizing the business environment, and improving the market supervision system as a foundation. Handling the relationship between the government and the market and promoting the improvement of the socialist market economy system centers on the government. The more standardized government behavior is, the more effective the market role will be.

高质量发展是新时代的硬道理。推动高质量发展需要政府和市场两只手协同发力。实现高质量发展中蕴含的公平、安全、和谐、可持续等多重目标，都要以更好发挥政府作用、解决政府干预过多和监管不到位问题为前提，单靠市场自发调节无法做到。构建高水平社会主义市场经济体制亟待解决市场体系不完善等问题，也需要以政府在保护产权、优化营商环境、健全市场监管体系等方面更好发挥作用为基础。处理好政府和市场的关系，推动完善社会主义市场经济体制，重心在政府。政府行为越规范，市场作用就越有效。

At present, the market system still faces prominent problems such as a lack of uniformity in institutional rules, impeded flows of factor resources, local protectionism, and market fragmentation. At the same time, the transformation of government functions remains incomplete; the government intervenes too much and too finely in microeconomic operations, and the macroeconomic governance system is still imperfect. To improve the institutional mechanisms for promoting high-quality development, it is necessary to accelerate the transformation of government functions and resolutely reverse the phenomena of misplacement, overreach, and absence of government functions. Ideologically, we must show greater respect for the general law of the market economy that the market decides the allocation of resources, seize the key of accelerating the transformation of government functions, and use the method of further deepening institutional reform to push the government to shift more from a manager to a service provider. The powers that should be delegated to the market and society must be fully and properly delegated; the matters that the government should manage must be managed well and to the full extent.

眼下，市场体系仍存在制度规则不够统一、要素资源流动不畅、地方保护和市场分割等突出问题。同时，政府职能转变还不到位，政府对微观经济运行干预过多过细，宏观经济治理体系还不完善。为了健全推动经济高质量发展体制机制，必须加快转变政府职能，坚决扭转政府职能错位、越位、缺位现象。要在思想上更加尊重市场决定资源配置这一市场经济的一般规律，抓住加快转变政府职能这个关键，用进一步深化体制改革的办法推动政府更多从管理者转向服务者。该放给市场和社会的权一定要放足、放到位，该政府管的事一定要管好、管到位。

From the dimension of resource allocation, the government should, on the premise of ensuring that the market plays a decisive role in resource allocation, commit itself to establishing a high-level, high-standard market economy system, accelerate the formation of relations of production more compatible with new quality productive forces, shape new drivers and new advantages for development, and promote the concentration of all types of advanced production factors toward the development of new quality productive forces. In economic activities, the government should more often tell business entities what they cannot do; as for what they can do and should do, business entities should make judgments based on market changes.

从资源配置维度，政府应以保证市场在资源配置中发挥决定性作用为前提，致力于建立高水平、高标准市场经济体系，加快形成同新质生产力更相适应的生产关系，塑造发展新动能新优势，促进各类先进生产要素向发展新质生产力集聚。在经济活动中，政府更多是告诉经营主体不能做什么，至于能做什么、该做什么，应由经营主体根据市场变化作出判断。

From the dimension of national governance, emphasis should be placed on building a law-based government, taking law-based governance as the orientation to build a high-level socialist market economy system, and advancing the modernization of the national governance system and governance capacity. In economic work, scientific macroeconomic regulation and effective government governance should be regarded as inherent requirements for leveraging the advantages of the socialist market economy system, improving the macroeconomic governance system, and enhancing the forward-looking, targeted, and effective nature of macroeconomic regulation.

从国家治理维度，要突出法治政府建设，以法治化为取向建设高水平社会主义市场经济体制，推进国家治理体系和治理能力现代化。在经济工作中，要把科学的宏观调控、有效的政府治理作为发挥社会主义市场经济体制优势的内在要求，健全宏观经济治理体系，提高宏观调控的前瞻性、针对性、有效性。

From the dimension of fairness and justice, while emphasizing the general laws of the market economy, striving to make the "cake" bigger, and promoting development, the government should more fully play its important role in manifesting fairness and justice and promoting common prosperity, increase efforts to ensure and improve people's livelihoods, and enhance the people's sense of gain, happiness, and security.

从公平正义维度，应在强调市场经济一般规律，努力做大“蛋糕”、促进发展的同时，更加充分发挥政府在彰显公平正义、推动共同富裕等方面的重要作用，加大保障和改善民生力度，增强人民群众获得感幸福感安全感。

From the dimension of national security, it is required both to effectively utilize market mechanisms to improve the efficiency of resource allocation, raise the quality of development, and consolidate the economic strength foundation of national security, and to better leverage the role of the government to remedy market failures, enhance economic resilience, and build a solid security barrier.

从国家安全维度，既要求有效运用市场化机制提高资源配置效率，提升发展质量，夯实国家安全的经济实力基础，又要求更好发挥政府作用，弥补市场失灵，增强经济韧性，筑牢安全屏障。

Ensure landmark reform measures are implemented and yield results

推动标志性改革举措落地见效

Properly balancing the relationship between an effective market and a proactive government fundamentally relies on reform. We must focus on building a high-level socialist market economy system, take "being able to both 'loosen up' and 'manage well'" as the goal, use the method of deepening reform to transform government functions and cultivate the market system, ensure landmark reform measures are implemented and yield results, and foster a favorable situation where an effective market and a proactive government work in synergy to jointly promote high-quality development.

统筹好有效市场和有为政府的关系，从根本上说还是要靠改革。要聚焦构建高水平社会主义市场经济体制，以既“放得活”又“管得住”为目标，用深化改革的办法转变政府职能、培育市场体系，推动标志性改革举措落地见效，推动形成有效市场和有为政府协同发力、共促高质量发展的良好局面。

From the perspective of cultivating an effective market and achieving "loosening up," we must continuously expand the space for market mechanisms to function and create a fairer and more dynamic market environment. The core function of the market is resource allocation; it is necessary to remove institutional and mechanistic obstacles hindering the autonomous and orderly flow of factors, promote the smooth flow of production factors, the efficient allocation of various factors, and the full release of market potential. Two key points must be grasped here. One is to promote the rational, smooth, and orderly flow of labor factors. By deepening the reform of the household registration system, relaxing and easing restrictions on urban settlement except for a few megacities, exploring the implementation of a system for mutual recognition of household registration transfers and residence permits within urban agglomerations, and opening up channels for talent exchange among universities, research institutes, and enterprises, we can realize the full utilization of people's talents. The other is to deepen financial supply-side structural reform. Guide various types of financial institutions to achieve differentiated development and division of labor and cooperation, improve the interconnection mechanism of capital markets at all levels, guide long-term capital to invest early, invest small, invest long-term, and invest in hard technology, unblock channels for funds to enter the real economy in all directions, and form a financial structure compatible with the structure of the real economy. Promoting factor market reforms to achieve the optimization and maximization of resource allocation efficiency is the key to cultivating an effective market that must be grasped.

从培育有效市场、实现“放得活”角度看，要持续拓展发挥市场机制作用的空间，创造更加公平、更有活力的市场环境。市场的核心功能是资源配置，必须破除阻碍要素自主有序流动的体制机制障碍，推动生产要素畅通流动、各类要素高效配置、市场潜力充分释放。其中有两个重点要把握。一个是推动劳动力要素合理畅通有序流动。通过深化户籍制度改革，放开放宽除个别超大城市外的城市落户限制，探索实行城市群内户口通迁、居住证互认制度，打通高校、科研院所和企业人才交流通道，实现人尽其才。一个是深化金融供给侧结构性改革。引导各类金融机构错位发展和分工协作，健全各层次资本市场互联互通机制，引导长期资本投早、投小、投长期、投硬科技，全方位疏通资金进入实体经济的渠道，形成与实体经济结构相适应的金融结构。通过推进要素市场化改革，实现资源配置效率最优化和效益最大化，是培育有效市场必须把握的关键所在。

From the perspective of building a proactive government and achieving "managing well," we must better maintain market order, remedy market failures, and ensure the stable and long-term development of the economy. Under circumstances of greater downward pressure on the economy, the government should optimize the allocation of various incremental resources and the structural adjustment of existing stocks, improve the macroeconomic regulation and control system, implement more proactive and effective macro policies, strengthen unconventional counter-cyclical adjustments, improve the overall effectiveness of policies, and focus on stabilizing expectations and stimulating vitality. By expanding the government's balance sheet to address the potential risks of balance sheet contraction in the household and corporate sectors, stimulate the vitality of business entities, and truly reflect the government's "proactive" role at critical moments. The government must also grasp the dynamic balance between stabilizing growth and preventing risks. It should not only focus on strengthening market supervision, hardening the budget constraints of local governments and state-owned enterprises, and promoting the marketization of risk pricing, but also be highly vigilant against the interaction, contagion, accumulation, and amplification of various types of risks, strengthen risk prevention and disposal in key areas, and effectively prevent and resolve risks in areas such as small and medium-sized financial institutions and local government debt.

从建设有为政府、做到“管得住”角度看，要更好维护市场秩序、弥补市场失灵，确保经济行稳致远。在经济下行压力较大情况下，政府应优化各类增量资源配置和存量结构调整，完善宏观调控制度体系，实施更加积极有为的宏观政策，加强超常规逆周期调节，提高政策整体效能，着力稳定预期、激发活力。通过扩张政府资产负债表，来应对居民部门和企业部门资产负债表收缩的潜在风险，激发经营主体活力，真正体现政府在关键时刻的“有为”。政府还要把握好稳增长与防风险之间的动态平衡，既要注重强化市场监管，硬化地方政府和国有企业的预算约束，推动风险定价市场化，又要高度警惕各类风险之间的互动、传染、叠加和放大，加强重点领域的风险防范处置，有效防范化解中小金融机构、地方政府债务等领域风险。

(The authors are researchers at the Research Center for Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the Institute of Finance and Banking, Chinese Academy of Social Sciences)

（作者系中国社会科学院习近平新时代中国特色社会主义思想研究中心研究员、金融研究所研究员）

Online Editor: Huihui

网络编辑：慧慧