If China is to set up a full market-oriented system by 2020 as it intends, the government will have to phase out much of its involvement in major economic activities.

That was the opinion expressed yesterday by a group of high-ranking State Council officials, including Vice-Premier Zeng Peiyan, at a reform forum organized by the National Development and Reform Commission.

"We are standing at a crossroads, and government reform will finally decide whether we succeed or not," Zeng said.

China started its market-oriented reform in 1978, gradually dismantling its planned economy system. Its annual economic growth rate since then has averaged more than 9 per cent.

"But we still face some complicated and challenging problems," Zeng said.

He listed the government's economic investment spree, intervention in the activities of enterprises, and low awareness of the need to provide timely public services as major challenges ahead.

Ma Kai, the commission's chief, underscored the urgency and promised his commission will lead the new round of institutional reform.

He said the government should not pay too much attention to economic growth and should instead give priority to the provision of public services.

However, experts pointed out that other levels of government are already heavily involved in attracting investment and businesses.

In a recent official survey of more than 100 senior economists and policy experts by the Hainan-based China Institute for Reform and Development (CIRD), nearly 96 per cent said "the hard nut of China's further reform lies in the government."

Chi Fulin, CIRD executive president, said the State Council should form a cabinet ministry to plan the country's economic development for both the medium and long term.

"I already told Premier Wen Jiabao that when he summoned six economists to discuss the economic situation," Chi said. "It's a very important step for China's economic reform."

He named the suggested department the "Economic Ministry," the responsibility for which would be taken over by Ma's commission.

"But the commission also takes responsibility for implementing and supervising China's medium and long-term economic plan, and problems are likely to arise," Chi said. "The goal of my policy suggestion is to separate economic planners from supervisors."

When the market economy has developed to a certain stage, the government's role in providing public services will have to be intensified again.

Compulsory education, a basic health insurance network and affordable homes for low and medium-income families are currently the most pressing services the Chinese Government should offer its people, Chi said.

(China Daily July 13, 2005)