Editor’s note: People’s Daily, the official newspaper of the Communist Party of China, published an editorial Tuesday entitled ‘Understanding the Characteristics of Capital and Its Behavioral Pattern.’ Here’s a translation of the article.
The five major theoretical and practical issues raised at the annual Central Economic Work Conference (CEWC) are global, strategic and forward-looking issues that matter to the cause of the Communist Party of China (CPC) and the state. They play a significant guiding role in implementing the new development philosophy in a complete, accurate and comprehensive manner, accelerating the building of a new development paradigm and promoting high-quality development in the new development stage. One important issue is to “understand the characteristics of capital and its behavioral pattern.”
As a great innovation, the socialist market economy definitely frees up capital in all its forms. As capital is profit-driven, efforts should be made to strengthen the supervision of capital in accordance with the law to prevent its unchecked growth and, more importantly, regulate it in a standardized and healthy way. In the context of the socialist market economy, we need to understand the characteristics of capital and its behavioral pattern so that we can give play to its positive role as a factor of production and rein in its negative effects.
The socialist market economy is essentially an economy under the rule of law, in which capital activity must abide by the law to ensure property rights protection, contract maintenance, market unity, fair competition and effective supervision. Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at its core has made a series of major decisions and arrangements around improving the legal system of the socialist market economy to advance the building of a high-standard market system and the establishment of a unified, open and fair market system.
This has prevented the disorderly expansion of capital and ensured fair market competition. This suggests that to understand the characteristics of capital and its behavioral pattern, we must set criteria for capital, improve the negative list management for market access, strengthen source control and industrial supervision as well as market regulation, anti-monopoly and anti-unfair competition regulations, strengthen the supervision of capital in accordance with the law and prevent its unchecked growth and guide the standard and healthy development of capital. Both a “red light” and “green light” should be set up. The former aims to delimit boundaries and strengthen criteria, and the latter aims to give play to the active role of capital as a factor of production.
It should be noticed that preventing the unchecked growth of capital does not mean we must do away with capital; instead, we should ensure its orderly development. Measures should be taken to balance development and security, efficiency and equality, vitality and order, as well as domestic and international markets. Equal importance should be attached to regulation and development.
Moreover, rules and bottom lines must be clarified and criteria must be set to guide enterprises to serve the overall interests of economic and social development under the leadership of the CPC, encourage and support enterprises to play a positive role in promoting technological progress, boosting the market economy, making people’s life more convenient and participating in international competition. Standardizing development and strengthening supervision will contribute to healthier, more sustainable and longer-term development; preventing the disorderly expansion and unchecked growth of capital is for the sake of its orderly and healthy development, which is of significance for supporting related enterprises to achieve standardized, innovative, healthy and sustainable development. We can build a firmer barrier for various forms of capital and standardized and healthy development of all industries by strengthening effective supervision of capital, improving legal systems such as market access, industry supervision and fair competition and laying a solid institutional foundation for effective operation of the socialist market economy.
The CPC has summarized its experience in socialist construction and built the socialist market economic system that features public ownership as the mainstay developing side by side with other forms of ownership and a labor-based distribution system coexisting with various modes of distribution. The Party’s viewpoint on adhering to the basic economic system is clear and consistent and there has never been any irresolution.
Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at the core has worked unswervingly to both consolidate and develop the public sector and encourage, support and guide the development of the nonpublic sector, explored various ways for realizing public ownership, supported reform and development of private enterprises and fostered more vital market entities. To understand the characteristics of capital and its behavioral pattern, we need to uphold and improve the socialist basic economic system, create a market environment in which all subjects of ownership get equal access to resources, engage in open, fair and justice competition and enjoy the same legal protection, maximize the vitality of market entities and enable the great increase in the vitality of all labor, knowledge, technology, management and capital and the full utilization of all sources that create social wealth.
It should be noticed that capital creates value and grows unchecked out of the desire to make a profit. The ability or inability to guide its behavior makes the difference between value creation and barbaric growth. A correct understanding of the characteristics of capital and its behavioral pattern in the socialist market economy can play to our strengths, offset our disadvantages, give full play to the positive role of capital while keeping it at bay and drive the sustainable and healthy development of the economy.
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