The Role of the Central Government in the Transformation to a Market Economy

The target of reform of the economic system in China is to establish a socialist market economy. ¹ In a large, populous country with a backward economy and imbalance in [economic] development, the realization of industrialization and modernization is a great, and brand-new, enterprise. Similarly, establishing a socialist market economy is an equally great and brand-new enterprise. Many important theoretical and practical problems [related to this] remain to be studied in depth. One of the key problems among these is: In the transformation from a traditional centrally planned economy to a market economy, should China be continuously strengthening the state’s capacity or continuously weakening the state’s capacity? Do we reinforce the leadership role of the central government or do we strengthen the leadership role of the local governments?