What are the basic features of China's social market economy?

The five characteristics of modern market economy:

Independent enterprise system Effective market competition ; Standardized government functions ; Good social credit ; Sound foundation of the rule of law.

From the current economic system of the world's current situation, the implementation of the market economy in the vast majority of countries, but really realize the goal of a prosperous economy, are the establishment of a standardized and effective market economy system of the country. Although many countries have practiced market economy for a long time, they are still struggling in unregulated and inefficient market economy. It can thus be seen that there are also good and bad market economies. It is not the case that the allocation of resources can be optimized automatically and social welfare can be increased automatically as long as a market economy is implemented. In particular, it is worth noting that in the transition from a planned economy to a market economy, countries that used to have a planned economy may easily fall into an unregulated and inefficient market economy and find it difficult to extricate themselves from it if they do not do a good job. According to the experience of countries around the world, the operation of standardized and effective market economy system generally has the following five **** the same characteristics, namely, independent enterprise system, effective market competition, standardized government functions, good social credit and a sound foundation of the rule of law.

Independent enterprise system

Independent market players are the cornerstone of a market economy, and enterprises are the most important market players.

An important feature of a market economy different from a planned economy is the allocation of resources through decentralized decision-making and the price mechanism. The advantage of decentralized decision-making is that each enterprise can make use of the information they have been given to make decisions, thus avoiding the insurmountable information difficulties of a planned economy. However, in order to achieve decentralized decision-making, enterprises must be sufficiently independent, otherwise decentralized decision-making cannot be achieved. From the point of view of the standardized market economy system, the independent enterprise system mainly includes three meanings: first, the enterprise has a clear and independent property rights and by the effective protection of the law; second, the enterprise has full decision-making power, can be based on the changes in the market information independent decision-making; third, the enterprise is responsible for their own decision-making and behavior of civil liability. These three aspects are interrelated, complementary, and indispensable.

Clear and independent property rights is not only the basis of market transactions can be carried out smoothly, but also the enterprise investment and trade activities of the power source, is the formation of an effective corporate governance structure. If property rights are not clear or effectively protected, an independent enterprise system cannot be truly established. Similarly, the ownership of autonomy by an enterprise and its responsibility for the consequences of its decisions are two sides of the same coin; an enterprise cannot and should not be held responsible for the consequences of its decisions if its decisions are often subject to external interference, and, conversely, the ownership of autonomy in decision-making is dangerous if the enterprise cannot be held genuinely accountable for the consequences of its actions. The results of modern economic research have amply demonstrated that the market mechanism is not only a means of resource allocation, but also a mechanism of incentives and constraints. Ensuring that decision-makers are responsible for the consequences of their decisions is both a constraint and an incentive for decision-makers.

Since the reform, along with the rapid development of non-state economy and the reform of state-owned enterprises, China's independent enterprise system has been developed to a certain extent, but there is still a considerable gap compared with the requirements of establishing a perfect market economic system. First, the reform of state-owned enterprises has not yet made breakthrough progress, and most state-owned enterprises, especially large industrial groups and the four major specialized banks, are not yet truly independent market players. The problems of clarifying the property rights of state-owned assets and establishing effective ways of realizing property rights have not been fully resolved either. The establishment of the State-owned Assets Supervision and Administration Commission (SASAC) has only formally solved the problem of decentralized exercise of state-owned property rights, and the greater and more arduous task is how to ensure that SASAC will become a real institution that performs the power of capital contributors with relative rights and responsibilities, instead of becoming an administrative unit that only has rights but is not responsible for the consequences of its decisions. Second, the development of non-publicly owned enterprises is subject to various interventions and constraints from outside the enterprises, either explicitly or implicitly, and the autonomy of enterprise decision-making needs to be further realized. Third, infringement of property rights has occurred repeatedly, the legal environment for the protection of property rights needs to be improved, and social awareness of respect for property rights needs to be formed. Fourth, how to form an effective mechanism to make enterprises responsible for the consequences of their decisions is also a difficult problem we face. The bankruptcy system is the most powerful market restraint system, but the implementation of this system in the state-owned economy has been greatly out of shape. Similarly, because of the lagging reform of state-owned enterprises, effective property rights constraints have not been formed, and the formulation of a standardized Bankruptcy Law covering the whole of society also faces many difficulties.

Effective market competition

Competition is the most fundamental guarantee of the effectiveness of a market economy. The market mechanism is precisely through the competition between the best and the worst, forcing enterprises to reduce costs, improve quality, improve management, and actively innovate, so as to achieve the result of improving efficiency and optimizing the allocation of resources. But competition must be effective, otherwise it is also difficult to achieve good results. From the point of view of the standardized market economic system, effective market competition mainly includes three aspects: first, competition must be fair; second, competition must be relatively adequate; third, competition must be orderly.

Fairness of market competition requires that laws, regulations and relevant government policies treat different market players equally. In terms of market access, access to factors of production, and enjoyment of legal protection and policy support, it creates a market environment of equal competition for all types of enterprises. At the same time, equal competitive opportunities are created for workers in terms of personnel mobility, employment options, vocational training, and labor insurance and welfare. A level playing field means fairness of opportunity, and only fairness of opportunity is an effective way to realize the unity of social justice and economic efficiency.

Another condition for guaranteeing the effectiveness of competition is the elimination of all kinds of administrative and economic barriers that prevent enterprises from entering and exiting the market, so as to ensure the relative adequacy of competition. Administrative barriers mainly refer to market monopolization due to administrative power, such as industry monopoly and local protection. Economic barriers, on the other hand, are mainly market monopolies caused by the excessive size and market concentration of a particular enterprise or enterprises. Although different in nature, both types of monopolies undermine the effectiveness of competition and both require measures to eliminate them. Moreover, for effective competition, the free exit of firms is as important as their free entry. The fairness and effectiveness of competition can also be seriously jeopardized if the losers of competition are unable to exit freely because of various administrative or economic barriers.

Finally, effective competition must be orderly competition. Orderly competition requires, first of all, in line with the requirements of the market economy, the "rules of the game", such rules include both formal laws and regulations, but also includes informal industry norms, international practice and so on. At the same time, market players must strictly abide by such rules, for this reason, must strictly stop fraud, counterfeiting, low-priced dumping and price cartels and other unfair competition.

Regulated Government Functions

One of the prominent features of a modern market economy is the maintenance of a certain distance between the government and the economy. The normal functioning of the market economy cannot be separated from the role of the government, but the role of the government must not be too large, and its behavior must be subject to legal constraints; otherwise, if the government arbitrarily intervenes in economic activities, it will likewise damage the vitality and creativity of the private economy. Regulated government behavior that successfully promotes the effective functioning of market mechanisms is often referred to as "good governance" or "limited and effective government". Good governance consists of the following elements:

First, the functions of government are clearly and appropriately defined by law. In a regulated market economy, the role of the government is not to replace the role of the market, but to enhance the role of the market, i.e., to maintain the market order, to maintain fair competition, and to create the conditions for the normal functioning of the market mechanism by formulating and enforcing the rules. Where problems can be well solved through market mechanisms, the Government need not intervene, while where problems cannot be solved through market mechanisms, the Government must take responsibility. If the government fails to play its role effectively where it is needed, the normal functioning of the market mechanism will also be jeopardized. According to this principle, there are three main areas in which the Government needs to play a role: first, the formulation and implementation of rules, including the definition and protection of property rights, the supervision of the implementation of contracts and the fair enforcement of laws. The second is to carry out aggregate macroeconomic regulation, redistribute income, prevent excessive income disparities and maintain a stable economic and social environment. The third is to provide public **** products.

Second, democratic and transparent government decision-making procedures. The proper exercise of government functions not only requires the government to do only what needs to be done, but also requires that decisions be made correctly to minimize mistakes, and correct decisions depend on correct decision-making procedures. With the development of the modern economy, the information and specialized knowledge on which decision-making relies is becoming more and more complex, and it is difficult to ensure that correct decisions are made by relying only on the personal wisdom of a few leaders. Examining governmental decision-making under the conditions of a regulated market economy, an important feature is that major decisions must not only be fully justified by professionals, but also fully listen to the views of all sectors of society, especially those who are subject to regulation. The government decision-making procedures stipulated in the form of laws or regulations can also serve to monitor government behavior, reduce arbitrary interference and reduce corruption.

Thirdly, government power should be effectively constrained by law. As compared with other market players the government has a natural advantage, and therefore must be through the law of its intervention in the economy to effectively restrain the behavior, otherwise the independent enterprise system and free trade will be difficult to be guaranteed. Laws and regulations must provide for the content, manner and authority of government intervention in the economy in line with the requirements of a market economy and in as much detail as possible. If the law provides for too much power for the government to intervene in the economy that it should not have, or if the law leaves too many gaps, or if the legal provisions are too thick and leave too much flexibility and give the government too much discretionary power, it will lead to excessive and arbitrary government intervention in the economy. The government must act within the bounds of the law, and its behavior must be under the supervision of the legislature and public opinion.

Fourth, it effectively stops corruption of government officials. A large number of empirical studies show that serious corruption is an important factor leading to low growth and low income levels. Corruption can bring huge costs to economic development and is the most important factor leading to an unregulated, ineffective and bad market economy. Corruption not only significantly increases the transaction costs of a market economy, but also constitutes a barrier to market access, undermines the formation of an effective competitive environment, tarnishes the reputation of the Government and reduces the Government's ability to effectively manage the market economy. Therefore, the ability to effectively curb the spread of corruption is related to the success or failure of China to establish a sound socialist market economic system.

Good social credit

Honesty and trustworthiness in any period of time for any country, any nation, any system has a universal value, not honest and trustworthy, not diligence and dedication, any kind of rules of the game are difficult to operate normally. But for the modern market economy honesty and trustworthiness is particularly important. This is because, with the traditional market economy is mainly spot transactions, that is, one hand to pay, one hand to deliver the goods different, the modern market economy is mainly credit transactions. The emergence and development of credit transactions has overcome the limitations imposed by the separation of time and space, thus greatly expanding the scope of market transactions. However, credit transactions are based on the honesty and trustworthiness of both parties to the transaction, otherwise not only will the cost of the transaction rise significantly, but also the breadth and depth of the transaction will be greatly affected. Particularly worthy of attention is that, with the development of modern information technology and network technology, low-cost e-commerce will be more and more widely used, but if there is no good credit as the basis, the development of e-commerce will also be greatly constrained.

Under the standardized market economy system, honesty for enterprises not only means better reputation, but also means higher competitive advantage. Through strict fulfillment of the contract, the enterprise can not only win customers, but also establish a good brand. Good faith to suppliers can make the enterprise win the trust of suppliers, so as to get better supply conditions. And integrity with creditors and investors means the ability to obtain more financing at lower prices. It is particularly worth pointing out that a good credit foundation and culture is the basis on which the modern enterprise system can function properly. If directors fail to fulfill their obligations of integrity to shareholders well, if managers fail to be honest and dedicated, and if insiders always deceive investors with false information, the modern enterprise system, even if formally established, cannot really work.

The development experience of various countries also shows that the integrity of the government is more important than the honesty and trustworthiness of the market players. The transparency and predictability of government policies and the strict fulfillment by the government of its commitments to the community not only directly affect the state of social credit, but also enhance the confidence of other market players and serve as a model for the formation of good social credit.

Sound foundation of the rule of law

From the historical experience of the evolution of economic systems in various countries, the key to whether a country can truly realize the transformation from a traditional market economy or a planned economy to a modern market economy lies in whether it can truly establish a foundation of the rule of law adapted to the needs of a market economy. This is because, as mentioned above, a market economy is a competitive economy, and competition cannot be separated from rules and the rule of law. Without a good environment for the rule of law, the independence of market subjects, the effectiveness of market competition, the normality of governmental behavior and the orderliness of the market will lack a fundamental guarantee. Therefore, fundamentally speaking, the modern market economy is the rule of law economy. Market economy is diverse, only the establishment of a modern market economy based on the rule of law is an effective way to realize the effective allocation of resources and the rich and strong, this is an important experience in the history of modern economic development, it is worthwhile for us to seriously absorb.

The rule of law as the basis of the modern market economy mainly contains three meanings:

One is that the content of the law is in line with the basic or recognized justice, especially in line with the intrinsic requirements of the market economy. The soundness of the environment of the rule of law does not mean that more laws are better; what is more important is that the laws are good rather than bad. If the law is not an effective protection of property rights and fair competition, but excessively restricts the freedom of economic agents, then the more such laws there are, the more harmful it will be to the market economy instead. The fact that the rule of law environment in many countries is unsound and fails to create good conditions for the effective functioning of the market mechanism is not because they have not enacted a sufficient number of laws, but because their laws do not meet the requirements of the objective laws of the market economy, or even run counter to the requirements of the market economy. Good laws need to be safeguarded by good legislative procedures, which require not only the openness and transparency of the specific legislative process, but also a relatively sound democratic and constitutional basis.

The second is that the law is supreme, everyone is equal before the law. In the "rule of law" countries, all citizens, citizens groups and government agencies, must abide by the law, are not above the law. Any individual or institution, regardless of their status and social background, their illegal behavior must be sanctioned according to law.

Third, the law is enforced fairly. This requires not only a sound judicial system, but also a good concept of the rule of law and law-abiding consciousness in the whole society. In contrast, this is the most difficult, because the formulation of the law, after all, there are mature foreign laws to learn from, but a good judicial environment can only be realized through their own efforts, a good sense of the law and the concept of law-abiding even more need to go through a long period of publicity, education, training, as well as practice in order to establish.