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 last Saturday.
"We should push forward reform in all areas with greater resolution and courage," according to the draft of 12th Five-Year Plan (2011-2015), which was submitted to the ongoing annual session of the national legislature.
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 four-trillion-yuan stimulus package to combat the global financial crisis in November 2008, critics said lavish public spending showed signs of reverting to planned economy, which underscores 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 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.
This mode of productivity made the world's most populous nation ration food for people prior to the 1990s.
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.
Without the market-oriented reform, China would not achieve today's remarkable economic feat, said Yao Yang, director of the China Center for Economic Research under the Peking University.
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 straight 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 June 2010, China piloted a new tax on sales of crude oil and natural gas in western Xinjiang Uygur Autonomous Region. The new measure, a shift from taxes based upon output, is a crucial step to save natural resources by raising consumption to save resources and protect the environment.
The government intends to impose the tax nationwide after regional trials.
"Those reform measures show the government is moving to give the market a bigger say in determining the use of resources," said Song Linfei, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body.
In the 12th Five-Year Plan, the government vowed 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.
A key problem facing China's SOEs was the market reform. Without it, even SOEs could not survive, said Shao Ning, deputy head of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), China's SOE regulator.
In the 12th Five-Year Plan, China pledged to transform its government functioning, simplify the administrative approval procedure and reduce its role in micro-economic activities.
"The government has realized its role of regulation and supervision, other than direct interference," said Wang Aijian, a deputy to the ongoing session of the National People's Congress (NPC), China's top legislature.
Although China has realized the importance of giving market forces a bigger role in the economic activities, it has a long way to fully make it, said Guo Shuqing, chairman of the China Construction Bank.
"China faces an arduous task of reform," he said.
Li Linkai, an NPC deputy, said the next five years is expected to be an important period of pushing forward market reform. However, Li, also the chief of the Guangdong Rongtai Industry Co., Ltd., has his concerns.
The government should take "concrete moves" to clear the obstacles facing private businesses, he noted.
"Equal treatment of state-owned and private businesses should be put into action, not only words," he said.
"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 last Saturday.
"We should push forward reform in all areas with greater resolution and courage," according to the draft of 12th Five-Year Plan (2011-2015), which was submitted to the ongoing annual session of the national legislature.
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 four-trillion-yuan stimulus package to combat the global financial crisis in November 2008, critics said lavish public spending showed signs of reverting to planned economy, which underscores 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 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.
This mode of productivity made the world's most populous nation ration food for people prior to the 1990s.
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.
Without the market-oriented reform, China would not achieve today's remarkable economic feat, said Yao Yang, director of the China Center for Economic Research under the Peking University.
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 straight 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 June 2010, China piloted a new tax on sales of crude oil and natural gas in western Xinjiang Uygur Autonomous Region. The new measure, a shift from taxes based upon output, is a crucial step to save natural resources by raising consumption to save resources and protect the environment.
The government intends to impose the tax nationwide after regional trials.
"Those reform measures show the government is moving to give the market a bigger say in determining the use of resources," said Song Linfei, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body.
In the 12th Five-Year Plan, the government vowed 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.
A key problem facing China's SOEs was the market reform. Without it, even SOEs could not survive, said Shao Ning, deputy head of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), China's SOE regulator.
In the 12th Five-Year Plan, China pledged to transform its government functioning, simplify the administrative approval procedure and reduce its role in micro-economic activities.
"The government has realized its role of regulation and supervision, other than direct interference," said Wang Aijian, a deputy to the ongoing session of the National People's Congress (NPC), China's top legislature.
Although China has realized the importance of giving market forces a bigger role in the economic activities, it has a long way to fully make it, said Guo Shuqing, chairman of the China Construction Bank.
"China faces an arduous task of reform," he said.
Li Linkai, an NPC deputy, said the next five years is expected to be an important period of pushing forward market reform. However, Li, also the chief of the Guangdong Rongtai Industry Co., Ltd., has his concerns.
The government should take "concrete moves" to clear the obstacles facing private businesses, he noted.
"Equal treatment of state-owned and private businesses should be put into action, not only words," he said.
