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China's Economic System

The 16th National Congress of the Communist Party of China (CPC) was held in November 2002 and put forward new tasks for Chinese economic construction and reform of economic structure :

  • Take a new road to industrialization and implement the strategy of rejuvenating the nation through science and education and that of sustainable development.
  • Make the rural economy flourish and speed up urbanization.
  • Advance the development of the western region and bring about a coordinated development of regional economies.
  • Stick to and improve the basic economic system and deepen the reform of the state property management system.
  • Improve the modern market system and tighten and improve macroeconomic control.
  • Deepen the reform of the income distribution system and improve the social security system.
  • Do a better job in opening up by "bringing in" and "going out".
  • Do everything possible to create more jobs and improve the people's lives.

    In light of the new trends in the economy, science and technology of the world and the requirements of our national economic development in the new period, we should undertake the following main tasks for economic development and reform in the first two decades of this century: to improve the socialist market economy, promote strategic adjustment of the economic structure, basically accomplish industrialization, energetically apply IT, accelerate modernization, maintain a sustained, rapid and sound development of the national economy and steadily uplift the people's living standards. Stick to and improve the basic economic system and deepen the reform of the state property management system. In line with the requirements of releasing and developing the productive forces, we must uphold and improve the basic economic system, with public ownership playing a dominant role and diverse forms of ownership developing side by side.

    Public economy includes not only the state-owned economy and collectively owned economy, but also the state-owned and collective ownership in the mixed ownership economy. The dominant position of public ownership mainly lies in the following points: public assets take the superiority in the total social assets; and the state-owned economy controls the lifeline of national economy and plays a leading role in economic development. Collective ownership economy is an important component of public economy. The collective sector may embody the principle of common prosperity, broadly absorb the dispersed social capital, relieve the social pressure and increase the common accumulation and state taxation.

    It is a must to establish a sound system of management, supervision and operation for state assets, and financial and foreign exchange control in order to effectively maintain and increase the value and prevent losses of state assets. It is also necessary to fully exert the leading role of the People's Bank of China in the financial system. The People's Bank of China is China's central bank and is responsible for the establishment and implementation of the national financial policies, and adjusts the currency circulation and credit. The People's Bank of China also exercises supervision and management on the whole financial activities. To expand the functions of the state-owned commercial banks and the national policy banks in the financial fields and develop non-bank financial institution and perfect social financing channel is also very important.

    To perfect the foreign exchange administration of capital accounts and boost with order Renminbi convertibility under capital accounts; to ameliorate the formation system of Renminbi exchange rate and to enhance the supervision and management on the foreign exchange business of the financial institutions are necessary measures.

    China's market economic system is an open economy. After more than 20 years' reform and opening up, an all-dimensional, multi-layered and wide-ranging opening pattern has been initially formed. The opening regions including special economic zones, national economic development zones and high-tech parks, etc. have been established, which will promote the development of national and regional economy.

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