Streamling govt administration ensures market's 'decisive' role

Streamlining the government administration is the most important measure to ensure the decisive role of market in resources allocation.

Zhang Liqun, an analyst with the Development Research Center of the State Council, made this comment lately to the media.

China will deepen its economic reform to ensure that the market will play a "decisive" role in allocating resources, according to the communique released after the Third Plenary Session of the 18th CPC Central Committee.

The market had been defined as a "basic" role in allocating resources since the country decided to build a socialist market economy in 1992.

"The role market plays and the extent it affects are decided by the how it governs and on what matters it governs," he explained, "The government should concentrate on those imperative administrations with a firm hand, and drop those unnecessary ones unhesitatingly."

The government should accelerate enhancing its abilities of market regulation, transferring its focus from administrative approval to supervisions and checks, he said.

"An overall arrangement has been made in the communique," he said.

The communique emphasized accelerating the changes to governmental functions, proposing the scientific macro regulation and efficient governmental management, which are the most important guarantee of market's "decisive" role, Zhang said.

The scientific macro regulation of government is very important, the analyst pointed out.

"If an economy was adjusted solely by market, there could appear some great cyclical fluctuations on the economic growth, which in turn could often bring negative effects to the long-term and overall development," he explained.

"According to the practice in China, the macro regulation of the government in an appropriate time and extent can reduce the scale of cyclical fluctuations, ensuring the smooth, healthy and sustainable development of economy. This is crucial to improving the efficiency of market in resources allocation," he added.

Therefore, a more reasonable function definition of government and market is the basic institutional guarantee for improving the efficiency and reducing the cost of the development, he said.

The new central government formed in March has been pushing forward an institutional reform to cut red tape and decentralize power. So far, it has abolished or transferred 221 administrative approval items to local governments.

Market-oriented reform is also under way. In July, China's central bank canceled the floor on lending rates. The China (Shanghai) Pilot Free Trade Zone launched in September is expected to create a testing ground for convertibility of the Chinese currency and the deregulation of interest rates.