Chi Fulin: How to Make the Real Economy Bigger and Better
Created On : 2017-12-20    Views : 312

Source: People's Daily

The report to the 19th CPC National Congress stresses that, “In developing a modernized economy, we must focus on the real economy, give priority to improving the quality of the supply system, and enhance our economy's strength in terms of quality”. Objectively, the construction of the modern economic system must focus on developing the real economy, deepening the supply-side structural reform, letting the market play a decisive role in the allocation of resources, and improving the government’s role. We must, on the basis of the requirements of the report of the 19th CPC National Congress, take the development of the real economy as the emphasis of the deepening of the supply-side structural reform, and work hard for better quality, higher efficiency, and more robust drivers of economic growth through reform.

The supply-side structural reform must target the development of the real economy. The real economy is the foundation of China as an economic power. As China's economic transformation is at a new historical starting point at present, the economic transformation and upgrading have a great potential for development and market space, and to become the main foundation for building a modern economic system. The problem is that the development of the real economy still faces major structural imbalances, such as the unbalanced structural supply and demand in the real economy, and escalation of consumer demand for high quality. However the main product supply system is still at the low end. This reflects that enterprise system reform has not caught up with the pace of the economic transformation and upgrading to a great extent, and the existing supply system is difficult to provide high-quality products and services. In the next few years, China will grow from an economic power to an economic heavyweight, which requires a powerful real economy. The final outcomes of releasing the great potential of the economic transformation and upgrading and building a modern economic system, must be reflected in the development of the real economy.

Promote enterprise system reform with innovation encouragement as the key. Enterprises are the cells of economic development. Acceleration of economic transformation and upgrading and the construction of a modern economic system, rely on a good enterprise system. The revitalization of the real economy and the improvement of the quality of the supply system must start with enterprise system reform, so as to form institutional arrangements that are not only conducive to expanding private investment, but to encouraging innovative enterprises. This requires us to achieve substantive progress in improving the property rights protection system, developing a mixed ownership economy, and forming system arrangements encouraging and protecting entrepreneurial spirit, according to the report to the 19th CPC National Congress. It is suggested to adapt to enterprises’ realistic demands on innovation and development, expand the scope of property rights protection, strictly protect intellectual property rights, and form a standardized and legalized property protection system; regard the development of innovative enterprises as an important focus of the mixed ownership reform, pay attention to strengthening state-owned capital by improving enterprises’ internal governance structure, and provide a larger system space for the participation of social capital; and create a good environment, and protect entrepreneurs' property rights and returns of innovation in accordance with the laws, with the aim to cultivate a world-class entrepreneurial team.

Construct an internationalized and legalized business environment with breaking monopoly as the key. The report to the 19th CPC National Congress explicitly proposed to “comprehensively implement the negative list system for market access, clean up various regulations and practices impeding market unification and fair competition, support the development of private enterprises, and stimulate the vitality of various market players.” This indicates that promoting innovation of the market access system with bigger determination and courage, and realizing an internationalized and legalized business environment, has become an important task for the current market-oriented reform. According to China’s actual conditions, optimization of the business environment shall focus on breaking administrative monopoly and preventing market monopoly, so as to form a market environment for fair competition. It is suggested to focus on breaking administrative monopoly and market monopoly in the service sector, accelerate the opening of the service market, strengthen the modern service industry; improve the market environment for fair competition with developing small and medium-sized enterprises as the key, accelerate the implementation of the Law on Promotion of Small and Medium-Sized Enterprises; reduce enterprise costs through taxation system reform, in a bid to further reduce the proportion of indirect tax.

Streamline administration and delegate power with regulatory changes as the key. In the past five years, the administrative system reform with streamlining administration and delegating power as the key has played an important role in releasing reform dividends, promoting economic transformation, and coping with pressure from the economic downturn. Faced with the new situation in which all kinds of risk factors have increased in economic operations, deepening the reform of streamlining administration and delegating power with regulatory changes as the key is good for the market to play a decisive role in resource allocation and better develop the role of the government This requires improving the market supervision system according to the requirement of the report of the 19th CPC National Congress. It is suggested to establish a capital market supervision system oriented to the protection of investors' rights and interests, and realize the transformation from the separated supervision to mixed supervision in the financial sector; promote the regulatory transformation with breaking the administrative monopoly in the service industry as the key, establish the administrative monopoly examination mechanism, improve the market supervision system for the service industry, realize the management of negative list for market access in the service industry; improve the unified and authoritative food and drug supervision system, so as to meet the demands of the whole society to upgrade the structure of consumption, and form a sound economic and social environment.

(The author is a delegate of the National Committee of CPPCC and President of the China Institute for Reform and Development (Hainan))