History and our experience over the past more than 30 years show that the key to achieving national rejuvenation, prosperity and the well-being of the people is to rely on reform and the continuous release of reform dividends.

China’s reform has entered the “deep water area” and it will be a profound, complicated and arduous process never before seen in history.

Economic restructuring, social transformation, administrative transition are dependent on major breakthroughs in reform, but these require making headway in adjusting major interest relations.

The third plenary session of the 18th Central Committee of the Communist Party of China shows determination and courage to promote the necessary comprehensive reform.

Giving priority to people’s livelihood and forming a reasonable interest structure are priorities, but these will involve major adjustments to interest relations and a major breakthrough in income distribution.

To solve the problem of the imbalance of interests, we should increase the income of urban and rural residents, especially low-income groups. The report of the 18th CPC National Congress set the goal that by 2020, the country’s GDP and per capita annual income of urban and rural residents should be double 2010 levels.

This goal can be achieved through substantive breakthrough in income distribution reform. Judging from international experience, the expansion of the middle-income group depends on the actual process of demographic urbanization.

Urbanization will bring about rapid development of the service industry, resulting in quick expansion of the middle-income group. But this will require the integration of migrant workers into cities so that they become service consumers.

Another necessary reform is adjusting the relationship between the government and market in order to release market vitality.

Past experience shows that this relationship has a bearing on overall reform. If well handled, it will not only ensure healthy economic development, but also bring about social harmony and help eliminate corruption.

Otherwise, a tense relationship will present many difficulties to economic restructuring, social transformation and the changing of government functions.

The prominent problem at present is the government’s excessive administrative intervention in microeconomic activities.

Therefore, a more rational relationship between the government and market is needed to allow the market to fulfil its basic role in allocating resources. A competitive market system offers the biggest reform dividends.

In this regard, we need to deepen price reform with the pricing of resources as the focus, promote financial reform with the marketization of interest rate and exchange rate as the focus, expand the space for social capital investment with promoting reform of monopoly industries as the focus, and adjust and optimize the allocation of State-owned capital with the focus on public welfare.

Whatever steps are taken to deepen economic, social, political, cultural and ecological reform, or to promote a new round of overall opening-up, there is an urgent need for legal and institutionalised guarantees and strengthening of the rule of law.

Comprehensively deepening reform requires accelerating the construction of a law-based government and a fair and just society.

Legislative guarantees for a modern market economy need to be established. A modern economy is market economy based on the rule of law. A market economy lacking the rule of law is not only unfair, it is also unsustainable.

Adapting to the changing situation and regulating the reform program through legislation will not only effectively guarantee market equity, it will also effectively prevent distortions of reform.

A fair legal environment is an important guarantee for social stability and healthy development. Reform of the judicial system should be accelerated to increase judicial transparency, and ensure the independence of the courts and an impartial judiciary.

Meanwhile, the construction of a law-based government is a fundamental step towards good governance. The legislation concerning finance, taxation, government purchases and the allocation of public resources must be strengthened. Only with administration according to law will the government achieve the goal of building a law-based government by 2020.

Deepening comprehensive reform requires further opening-up. But prompting reform with further opening-up will face more challenges.

However, releasing the dividends of further reform will benefit not only 1.3 billion Chinese people, but also regional economies that have close economic and trade ties with China. China’s ongoing transformation and comprehensive opening-up will let the world share the “China dividend,” especially regional economies.

The Chinese Dream is the realization of common prosperity for the 1.3 billion Chinese. Market-oriented reform over the past 35 years has successfully made China rank among middle-income countries, comprehensively deepening reform will enable the country to stride forward towards the rank of high-income countries.

By Chi Fulin 

The author is president of the China Institute for Reform and Development and the article is excerpts from his speech at the eighth China-Singapore Forum on Oct. 23. ― Ed.

(China Daily)

(Asia News Network)