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By Zhang Junkuo, Hou Yongzhi & Wang Hui

The reform and opening-up is a key move determining the future of contemporary China, and is also a key move for the realization of the "two centenary goals", namely, to complete the building of a moderately prosperous society in all respects by the time the CPC celebrates its centenary (2021) and to turn China into a modern socialist country that is strong, prosperous, democratic, culturally advanced and harmonious by the time the People's Republic of China marks its centennial (2049) and the realization of the Chinese dream of great rejuvenation of the Chinese nation.

Reform is an extremely complicated issue and to push it forward requires a clarification of the core issues during reform. As China has become one of the upper and middle-level income countries, it needs to increase the sustainability of development, release the potential for development, improve economic operation efficiency, and push the development forward onto a new level. It also needs to handle well the distribution of income, and promote social fairness and justice. These all need the reform as a guarantee. It is clearly pointed out in the Third Plenary Session of 18th CPC Central Committee, "China will uphold the direction of reform toward the socialist market economy, put the promotion of social fairness, justice and improvement of people's lives as the starting point and ultimate goal, further emancipate the mind, continue to release and develop the productive forces, and release and strengthen vigor of the society". This guideline on reform is focused on solving the fairness and efficiency issue through deepening reform as well as on solving the efficiency and growth issue, and the "starting point" and the "ultimate goal" rest on solving the fairness and justice issue.

Since the Third Plenary Session, a series of important reform measures concerning the above issues have been promulgated, which have promoted the improvement of efficiency and fairness, but the issue is still far from being settled. For some time to come, it is still necessary to follow the overall arrangements of the central leadership, implement all reform measures, and lay a new institutional foundation for the improvement of efficiency and fairness.

I. Significant Progress Has Been Made in Reform

Since last year, the central leadership has attached importance to the systematicity, integrality, and cooperativity of the reform, and comprehensively deepened the reform in all fields. In terms of the improvement of efficiency, a variety of reform measures have been taken. The first is speeding up the transformation of government functions and streamline administration and delegate more power to lower levels. The government has repealed or delegated the authority to examine and approve to lower levels a total of 416 items requiring administrative examination and approval, rescinded or exempted 348 administrative charges, and reduced the burdens on enterprises by over 150 billion yuan. The second is carrying out reform in the fiscal and taxation system. The government has passed the Overall Plan for Deepening the Reform in the Fiscal and Taxation System, and will advance the reform of the budgetary system and the taxation system, and will accelerate the establishment of a system in which the government's administrative authority is commensurate with its responsibility for fiscal expenditure. The third is striving to create a market environment for fair competition. The government has carried out the reform of industrial and commercial registration system, expanded the areas for the pilot project of "replacing business tax with value-added tax", comprehensively released the control on credit interest rates, set up the Shanghai Pilot Free Trade Zone, explored the management model that combines pre-establishment national treatment plus the negative list, and pushed forward the reform of the railway investment and financing system, the prices for resource products, and government's purchase of services, all of which have greatly inspired the vigor of market players. The fourth is building an innovative country by focusing on industrial restructuring. The government has deepened the reform of science and technology management system, and implemented the knowledge and technological innovation programs. China's research and development spending accounted for over 2% of GDP, and has spurred a number of key technologies to make significant breakthroughs, and strengthened the endogenous impetus for economic growth.

In terms of improvement of fairness, the government has also taken plenty of forceful reform measures. The first is taking the improvement of people's well-being as the fundamental aim and goal of its work, and promoting the all-round development of social undertakings. It has carried forward the establishment of endowment insurance and social relief systems, fostered the development of fairness in education, launched the program of aiding the poor with education, improved the basic medical insurance system that covers the whole population, raised the subsistence allowances, carried out pilot projects of medical insurance for major diseases, all of which have brought concrete benefits to the people. The second is strengthening production safety and market supervision. The government has strengthened the accountability system for preventing serious and major accidents, established a unified supervisory and administrative mechanism for food and drug, and regulated the market competition order. The third is innovating social governance model. The government has improved the integrated system of petition and mediation, abolished the education-through-labor system, formulated and revised 47 administrative laws and regulations, and forcefully promoted the social fairness and justice.

II. The Improvement of Efficiency and Fairness Is Still Faced with Severe Challenges

However, we should also be aware of the fact that the old fairness and efficiency issue is yet to be solved, and new problems have already emerged. The improvement of efficiency and fairness is still faced with great institutional obstacles and needs great concern.

First, there are still many factors preventing the improvement of economic quality, enhancement of efficiency, and upgrading of economic model. Currently China's economy is experiencing a transitional period of growth and throes of structural adjustments, with the international economic environment becoming increasingly complicated and uncertain, the factors and conditions supporting the development undergoing profound changes, and the conflicts of unbalanced, uncoordinated, and unsustainable development becoming increasingly prominent. The key to dealing with the challenges and resolving the conflicts is improving the quality and efficiency of economic operations, but a long-term mechanism for the improvement of efficiency is yet to be built. We have to go a long way to meet the requirement for handling the relationship between the government and the market in a proper manner in terms of conception, system, and mechanism. For instance, the transformation of government functions is not yet accomplished; too much government intervention in microeconomic activities and the lack of supervision stand side by side; and the role of the market in resource allocation is not fully played. Meanwhile, the power and responsibilities of the central and local governments are not reasonably allocated; the fiscal, taxation, and financial systems are not complete; the evaluation process for officials is deficient; and the government's role is not well played. Without timely deepening of reform and new breakthroughs made in important fields, the society will lose its vigor in innovation and creation, and be unable to transform and restructure itself, which will seriously affect economic efficiency, and even induce huge economic and social risks, leading the society into the so-called "medium-income trap". Therefore, we must resolutely break down the institutional obstacles that restrict the vitality of market players and the optimization and allocation of factors, allow the market to truly play a decisive role in resource allocation, and make the government play a better role, so as to realize efficient, high-quality, and sustainable development.

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