so, you want to create a fair market? then take it seriously

Since the Communist Party of China （CPC） Third Plenum held last year， during which the authorities pledged to allow the market to play a “decisive”role in the economy， there have been calls among Chinese entrepreneurs for the State to retreat from its current position in the country’s commercial environment.

In recent months， even voices from the country’s State-owned enterprises（soEs）， often seen as the main beneficiaries of State overlordship in economics， have added their voices to calls for further marketization. At a recent meeting that brought Premier Li Keqiang and a number of prominent entrepreneurs together to discuss future economic policy， Dong Mingzhu， chairwoman of State-owned home appliance giant Gree Group Ltd.， told Premier Li that what her company needs is not “supportive policy，” but a business environment in which companies can rely on fair competition to succeed.

Premier Li responded by urging senior officials in attendance to heed such calls for change. It has long been argued that it is the stubborn presence of vested interests in the departments overseeing commercial enterprises that has held back greater market reform in China.

In order to create a freely competitive market， the government will have to fight three tendencies and forces within its ranks C paternalism， local protectionism， and State monopoly.

Paternalism， a concept deeply rooted in the minds of many Chinese officials， has long interfered with progressive economic policies. Many officials see it as their duty to micromanage enterprises“for their own good，” despite few of these officials necessarily having a strong business background. Despite the liberalization of the last three decades， many Chinese officials still cling to their roles as overseers， and are increasingly seen simply as backseat drivers Cbusybodies getting in the way of progress.

Many economic problems that economists， analysts and the gen- eral public are currently bemoaning stem from the refusal of officials to leave enterprise to the entrepreneurs. Ongoing government support and subsidies to SOEs have not only resulted in the inefficient use of capital and materials， but have also made these companies dependent on government bailouts whenever they hit choppy waters. Moreover， the close relationship between bureaucracy and commerce， with no independent authorities in place to oversee it， is also a breeding ground for corruption， creating tenacious vested interests in many government departments， disincentivizing a voluntary retreat from the market.

Local protectionism is another bugbear of business leaders， with local governments remaining eager to use their administrative power to create market barriers in order to beat down competition from neighboring areas. A lack of clear definition between the respective administrative powers of central and local government， which enables re-interpretation of central policies at the local level， has stymied the development of an efficient and interconnected national market.

Most importantly， the authorities should continue to address the existence of State monopolies in a variety of industries， which above all other enterprises are the target of criticism from the business community. To a large extent， such monopolies are the foundation of both paternalism and regional protectionism， as they continue to receive overwhelmingly favorable treatment from all levels of government.

As the central leadership vows to deepen economic reforms， it must tackle these issues seriously and systematically. Otherwise， China has no hope of creating a genuinely competitive and healthy national marketplace.