Market economy with Chinese socialist characteristics: combination of effective government and efficient market


CHEN Yunxian


Peking University;Sun Yat-Sen University


The relation between government and market is known as the Goldbach conjecture in economics. As this article indicates, Smith’s third work expounded on national government behavior and probed into the roles and functions government should play. Keynes explained in his work why a series of measures were proposed for government to intervene in effective demand, rather than why national government could, in the capacity of participant or major entity, propel investment and infrastructure construction. This article demonstrates a gap in the resource generation literature that waits to be filled by modern mainstream economic theory. Successful practices in China, especially in Shenzhen, have proved that government can play a significant role as a competitive entity in the field of resource generation. Government competition can be classified in the narrow and broad senses, the efficient market can be divided into three tiers, effective government can be represented by three levels of performance, and nine modes for combining an effective government with an efficient market can be identified. This article breaks free of the limitations of the mainstream Western economic system and the configuration of market theories. First, in market economic theory terms, it proposes that a mature economy is one that integrates an effective government and an efficient market. It holds that many of the issues and practical problems in the economic development of the world are indications of defects in traditional market theory and holes in modern market theory, rather than problems with the market proper. Second, it proposes the concept of “mezzoeconomics” in the economic theoretical system, which is supposed to play an active and innovative role in remedying the defects in the orthodox economic system. It helps to fill in the gaps in the present-day economic system by establishing the mezzoeconomic system, with a regional or urban economy serving as its carrier and a regional government serving as a competition entity and playing a competitive role in the allocation of newly generated resources. Third, it puts forth theories of new economic engines for world economic growth based on analyses of that growth and holds that government should try its best to establish new engines for investment, innovation, and new governance, with a focus on infrastructure development and construction. This article substantiates the government-market relation through practical analyses, which it bases on explorations of the reform and opening up, economic development, and operative modes in China, particularly in Shenzhen, while also using development experience and research findings on world economic practice. By defining three categories of resources and the attributes of resource allocation in different phases of regional development in Shenzhen, it reveals the duality of the economic attributes of government, the duality of market competition entities, and the necessity of integrating an effective government and an efficient market for a mature market economy. It emphasizes that a successful government requires foresighted leading and that government needs both competition in innovation and innovation in competition. China’s reform and opening up and innovative development provide fertile soil for such economic generalization and theoretical sublimation. This article’s theoretical findings and empirical analyses of China’s economic growth can be incorporated into world economic theory and made a part of China’s contribution to world economics. They are deeply rooted in the author’s 10 years of research in institutions of higher learning, both Chinese and overseas; over 10 years of immersion in the financial sector; and over 10 years of work experience in regional government administration. In this article, the author thinks outside of the box by breaking away from Smith’s theoretical framework and proposing mechanisms that differ from those of Keynes’s government intervention. The findings should eventually serve world economic growth.


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Total: 7 articles

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