China's economic reform has entered into its 25th year since it began to "reform and open up to the world" in 1978. So far a socialist market economic system has been established at a basic level. Yet given China's complex situation, reform is far from over.

A recent issue of Outlook Weekly analyzes in an article the critical moment of reform now China is at and the next moves to be taken by the central government.

 

The article says, the Communist Party of China (CPC) is going to work out new concrete measures on how to further improve the socialist market economy at the third meeting of the 16th CPC Central Committee scheduled in October.

 

Speaking of problems in the current reform, the article suggests that the socialist market economic system is not yet complete as the core part of the traditional planned economic system remains unchanged. Interests of older government bodies and state monopoly sectors have not yet been broken up. Moreover, some newly established key systems are just still sketches and unstable with many problems remaining.

 

First, government restructuring function cannot meet the needs of all new situations. There is still a long way to go to improve the efficiency of government organs and administration levels; increase the transparency and consistence in the policy-making; reduce administrative interference in concrete matters; and to exercise correct public management in the economy and in society.

 

Second, the mechanism of large state-owned enterprises is not correct, and has heavy social burdens and poor innovation. State-owned enterprises in the monopolized sectors lack the pressure for "survival of the fittest", so that they lag far behind the demands of society and customers in terms of operating mechanisms, charging systems as well as service quality.

 

Third, investment and finance reform goes so slowly that many redundant building projects and importation of redundant technical facilities are caused by local protectionism and administrative interference.

 

Fourth, legal systems protecting private assets are still incomplete, related tax policies, financial policies and investment service systems are still poor, non-state owned economy has not yet been fully developed.

 

Fifth, institutional designs of financial systems and security market systems have shortcomings that result in unscientific distribution of finance resources, high percentage of bad debts, poor supervision of finance industry and high financial risk.

 

Sixth, social credibility is very poor and market order chaotic.

 

Finally, the distribution system of social income is not reasonable while social security system is backward, endowment insurance, employment insurance and medical insurance not yet complete.

 

The article attributes these contradictions and problems in the latest phase of reform to traditional ideas and behavioral norms formed under the planned economic system.

 

The new tasks for the next step include:

 

l         Launch a final war against the toughest and most stubborn parts within the system left by the planned economy

 

l         Adjust totally the monopoly system and power structure of the state-owned monopoly enterprises

 

l         Encourage bold innovations in political systems and superstructures that can not march up with the market economy

 

l         Downsize government bodies

 

l         Conduct basic adjustment towards the irrational interest order left by the old planned economic system and shaped by the transition from old to new

 

l         Change wrong governance brought about by effective supervision and over government interference on economic activities.

 

(China.org.cn by Zheng Guihong, October 6, 2003)