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Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform

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III. Accelerating the Improvement of the Modern Market System

Establishing a unified, open, competitive and orderly market system is the basis for the market to play a decisive role in the allocation of resources. We must put in place a modern market system in which enterprises enjoy independent management and fair competition, consumers have free choice and make autonomous consumption decisions, products and factors of production flow freely and are exchanged on an equal basis, strive to remove market barriers, and raise the efficiency and fairness of resource allocation.

9. Enacting market rules that are fair, open and transparent. We will implement a unified market access system; and on the basis of making a negative list, all kinds of market players may enter areas not on the negative list on an equal basis and according to law. We will explore a management model for foreign investors with pre-entry national treatment plus the negative list. We will make the business registration system more convenient by reducing the number of items that require qualification verification, turning certification before licensing into licensing before certification, and gradually changing the paid-in capital registration system into a subscribed capital registration system. We will propel reform of our domestic commodity distribution structure while building a business environment under the rule of law.

We will reform the market oversight system, implement uniform market oversight, tidy up and annul all sorts of regulations and methods that impede the national unified market and fair competition, strictly ban and punish all unlawful acts extending preferential policies, combat regional protection, and oppose monopoly and unfair competition. We will establish and improve a social credit system to commend honesty and punish dishonesty. We will improve the market exit system in which the good eliminates the bad, and perfect the enterprise bankruptcy system.

10. Improving the mechanism whereby prices are mainly determined by the market. Any price that can be determined by the market must be left to the market, and the government is not to carry out improper interventions. We will push ahead with pricing reforms of water, oil, natural gas, electricity, transportation, telecommunications and some other sectors while relaxing price control in competitive areas. Prices which are determined by the government will be limited to important public utilities, public-welfare services and network-based natural monopolies while raising transparency and accepting social supervision. We will improve the pricing mechanism for agricultural products, and attach importance to the market's role in determining prices.

11. Forming a unified construction land market for both urban and rural areas. We will allow rural collectively owned profit-oriented construction land to be sold, leased and appraised as shares, on the premise that it conforms to planning and its use is under control, and ensure that it can enter the market with the same rights and at the same prices as state-owned land. We will narrow the scope of land expropriation, regulate the procedures for land appropriation, and improve the rational, regular and multiple security mechanism for farmers whose land is requisitioned. We will broaden the scope of compensated use of state-owned land, and reduce land appropriation for non-public welfare projects. We will establish a mechanism for the distribution of incremental benefits from land that takes into account the interests of the state, the collective and the individual, and appropriotely raise individual income from such benefits. We will improve the secondary market for land leasing, transfer and mortgage.

12. Improving the financial market. We will open the financial industry wider, and allow qualified non-governmental capital to set up, in accordance with law, financial institutions such as small or medium-sized banks on the precondition that this comes under stronger oversight. We will push ahead with reform of policy financial institutions. We will improve the multi-layer capital market system, promote reform toward a registration-based stock-issuing system, promote equity financing through diverse channels, develop and regulate the bond market, and increase the proportion of direct financing. We will improve the compensation mechanism for the insurance industry, and establish an insurance system for catastrophe risks. We will develop inclusive finance. We will encourage financial innovations, and enrich the financial market with more levels and more products.

We will improve the mechanism for market-based Renminbi exchange rate formation, accelerate interest-rate liberalization, and improve the national debt yield curve that reflects the relationship between market supply and demand. We will promote the opening of the capital market in both directions, raise the convertibility of cross-border capital and financial transactions in an orderly way, establish and improve a management system of foreign debt and capital flow within the framework of macro-management, and accelerate the realization of Renminbi capital account convertibility.

We will carry out reform measures and stability standards for financial oversight, improve the mechanism for oversight and coordination in the financial sector, and define the oversight functions and risk management responsibilities at both the central and local levels. We will build a deposit insurance system, and improve the market-based exit mechanism for financial institutions. We will strengthen financial infrastructure construction to ensure that the financial market operates in a safe, efficient and stable way.

13. Deepening reform of the management system for science and technology. We will set up and improve mechanisms and institutions that encourage original innovation, integrated innovation, and re-innovation based on introduction and absorption, improve the mechanism that encourages market-based technological innovation, and give free rein to the market's guiding role in technological research and development orientation, choice of paths, pricing of factors, and allocation of all innovation factors. We will establish an innovation system that integrates enterprises, universities and research institutes, strengthen the dominant position of enterprises in technological innovation, give full play to the role of large enterprises as the backbone of innovation, arouse the innovation vitality of small and medium-sized enterprises, promote the reform of applied technology research and development institutes to make them more market-oriented and transform them into business enterprises, and build a national innovation system. We will strengthen the application and protection of intellectual property rights (IPR), improve the technological innovation incentive mechanism, and explore ways to set up IPR courts. We will abolish administrative dominance and departmental fragmentation, and develop a mechanism within which the market plays a key part in determining innovation programs and allocation of funds, and assessing results. We will develop the technology market, improve the technology-transfer mechanism, improve the financing conditions for small and medium-sized enterprises of science and technology, improve the venture capital investment mechanism, innovate business models, and promote the capitalization and industrialization of scientific and technological achievements.

We will integrate science and technology programs and resources, and improve the mechanism for the government to extend support to basic, strategic and pioneering scientific research and generic technology research. Major national scientific research infrastructure that should be open to the public in accordance with prescribed regulations is to be open without exception. We will establish an innovation survey system and an innovation reporting system, while building an open and transparent mechanism for state scientific research resource management and project appraisal.

We will reform the academician selection and management system, optimize the structure of disciplines, raise the proportion of young and middle-aged talented people, and put in place an academician retirement and exit system.