High hopes for open market in China

Entrepreneurs and experts have high hopes for the Chinese government's pledge to give market participants a greater say through cutting intervention, believing this will boost innovative growth. The aim to build a united and open market system with orderly competition and enable the market to play a "decisive role" in resources allocation, as stated by the Communist Party of China Central Committee in a document in November, is urgently needed. "My understanding is that the government will grow into a supervisor and service provider from a market participant and rules maker," said Yi Zhongge, vice president of the China Association for Small and Medium Commercial Enterprises. "Meanwhile, all market participants will enjoy fair treatment. It's what the market, particularly small and medium companies, have wished for," Yi said during an interview on Xinhua's television service CNC on Monday. The status elevation of the market from the "basic" to the "decisive" in allocating resources has reflected the urgency and great necessity for reforms of the market economy, said Wang Haifeng, a world economy researcher at the Academy of Macroeconomic Research. Years of rapid economic development since China's reform and opening up more than 30 years ago led to astounding achievements, but left behind issues such as the low level of innovation and shortage of influential brands. The transition for a greater market role is striving to change that, Wang said. Analysts say the document has shown a clearer direction for the Chinese economy after authorities realized that competence and innovation are key factors in boosting entrepreneurship and driving innovative growth. Zhang Yu, chairman of the China Arts and Entertainment Group, said that the essence of entrepreneurship could be called "destructive innovation", which means an entrepreneur has to constantly subvert his past and take on challenges for greater excellence by bringing new products and services to the market. But such a spirit demands courage. "If an external environment fails to provide the confidence he needs, his courage will be dented," Yi said. Various development zones across the nation are an example of local governments' failure to correctly position its role, according to Yi, who revealed that the rush to construct such zones might appear as local government leaders' desire for "beautiful" political performance in return for promotion opportunities. Some projects might be repeated constructions. They not only waste resources, but also add pressure to the environment, Yi said. "We have only around 20 industrial parks nationwide, but we find that some local governments can spend hundreds of millions of yuan to build a company, which I think are not things governments should do," said Zhang Ruimin, Haier Group chairman. But the decisive role of the market means more opportunities for our company, Zhang told Xinhua. Liu Chuanzhi, chairman of Legend Holdings, said that the changing role will boost market vitality and allow companies to compete under open and fair rules. "This will enable a company to demonstrate its full capacity," Liu said.