ABSTRACT
The relationship between government and market is the core issue of the economic system. The traditional planned economic system is characterized by the unclear division of the government and enterprises, where the government controls the right to make decisions on both macro-economy and micro-economy. The market economy in China is the socialist market economy in a big power under development and transition, which is the basic fact that we must understand so as to correctly understand the relationship between government and market in China. The relationship between government and market is essentially the relation between the society and individuals and between public interests and private interests. Some people believe that the government is the referee instead of the player in the market economy and so shall bear more functions in addition to formulating the market rules and maintaining the market order.
