First of all, we should let the market play the decisive role in allocating resources and let the government play its functions better. This is a major theoretical proposition in the Decision, because economic restructuring is still the focus of deepening reform comprehensively, and the appropriate handling of the relationship between the government and the market is still the core issue of the reform of the economic system.

In 1992, the Party's 14th National Congress stipulated that China's economic reform aimed at establishing a socialist market economy, allowing the market to play the basic role in allocating resources under state macro control. This key breakthrough in theory played an extremely important role in guiding China's reform and opening-up effort, and the development of its economy and society. It also illustrated that theoretical innovation pioneers the way for innovation in practice, and for comprehensively deepening the reform we must renew our theory first.

After 20 years of practice, a socialist market economy has been basically established in China. But there are still many problems. The market lacks order and many seek economic benefits through unjustified means; the market for factors of production lags behind in development, unable to allocate the factors of production to meet the effective demand; the lack of unified market rules means rampant protectionism initiated by departments or local governments; and market competition is not good enough to select the superior and eliminate the inferior, and thus slows down economic restructuring. If left unresolved, these problems will hinder the development of a sound socialist market economy.

Over the past two decades since the Party's 14th National Congress, we have kept searching for a new positioning for the relationship between the government and the market through practice and theoretical research. The Party's 15th National Congress proposed that "the market will play a basic role in the allocation of resources under state macro control," the Party's 16th National Congress proposed to "give a fuller play to the basic role of the market in the allocation of resources," the Party's 17th National Congress sought to "introduce institutions to give better play to the basic role of market forces in allocating resources," and the Party's 18th National Congress stipulated that the Party should "leverage to a greater extent and in a wider scope the basic role of the market in allocating resources." From the above progression it can be seen that we have been constantly deepening our understanding of the government-market relationship.

During the discussion and consultation sessions regarding the Decision, many suggested that the Party should further position the government-market relationship from a theoretical perspective, which would have great significance for deepening the reform comprehensively. With due consideration to these opinions and the current circumstances, and after much discussion and research, the Party Central Committee agreed that it was time to introduce a new theoretical expression concerning this matter, and that the "basic role" of the market in allocating resources should be revised to a "decisive role."

We have now basically established a socialist market economy in our country, with considerable improvement in the degree of marketization. We have gained better knowledge of the market rules and enhanced our capacity to use it to our benefit, and have improved the macro control system. With both the subjective and objective conditions ready, we should take a new step forward to improve our socialist market economy.

To further balance the relationship between the government and the market, we need to decide which of the two is to play the decisive role in allocating resources. To boost the economy, we must enhance the efficiency of the allocation of resources, especially that of scarce resources, so that we can use fewer resources to make more products and gain more benefits. Both theory and practice have proved that the allocation of resources by the market is the most effective means to this end. It is a general rule of the market economy that the market decides the allocation of resources, and a market economy in essence is one in which the market determines resource allocation. We have to follow this rule when we improve the socialist market economy. We should work harder to address the problems of market imperfection, too much government interference and lack of oversight. Positioning the market as playing a "decisive role" in resource allocation is conducive to establishing the correct notion of the government-market relationship in the whole Party and the whole society, and conducive to transforming the economic growth pattern and government functions as well as reining in corruption and other forms of misconduct. Our market economy is of a socialist nature, of course. We need to give leverage to the superiority of our socialist system, and let the Party and government perform their positive functions. The market plays a decisive role in allocating resources, but is not the sole actor in this regard.

To develop the socialist market economy, leverage should be given to both the market and the government, with differentiated functions. The Decision put forth clear requirements for improving the functions of the government, emphasizing that scientific macro control and effective governance are the intrinsic requirements for giving more leverage to the advantages of the socialist market economy. The Decision also makes plans for improving macro control, correctly performing government functions in all areas, and improving the organization of government. It stresses that the main responsibility and role of the government is to maintain the stability of the macro economy, strengthen and improve public services, ensure fair competition, strengthen oversight of the market, maintain market order, promote sustainable development and common prosperity, and intervene in situations where market failure occurs.