The Third Plenum marks the beginning of China's new wave of economic reform

The third plenary session of the 20th Communist Party of China Central Committee has made systematic arrangements to further deepen comprehensive reforms, proposing tasks in 14 aspects.

The goal of these reforms is to transform the economic system and important institutions by "making economic structural reform the spearhead."

The establishment of a "deadline" for task completion, which is by 2029, indicating a strong will and execution capability, is particularly noteworthy. "Building a high-level socialist market economy system" is the first among this set of reforms.

According to the tasks, "it is imperative to better leverage the role of market mechanisms to create a more equitable and dynamic market environment, achieving resource allocation efficiency optimization and benefit maximization."

Here, the socialist market mechanism's two primary objectives are highlighted: not just to increase resource allocation efficiency, but also to consider larger benefits. The market's vibrancy and fairness must be maintained.

Over the last few decades, major countries around the world have faced the problem of rising wealth disparities and increasing social inequality. The dual objectives outlined in the first reform task emphasize that the reform's starting point and final goal are "greater social fairness and justice, as well as improvements in people's wellbeing."

Enterprises are the foundation of the market economy. The articulation of the connection between the public and non-public sectors has always been a source of concern for both domestic and international circles.

This plenary session reaffirmed the "two unswerving," which are to consolidate and grow the public ownership economy while encouraging, supporting, and guiding the development of the non-public ownership economy.

In particular, it is argued that "economic entities under all forms of ownership have equal access to factors of production as per the law, compete in the market on an equal footing, and are protected by the law as equals."

This indicates that non-public economic entities, including private firms, would compete on an equal basis with public-owned enterprises in terms of financing, credit enhancement, and the use of factors of production, such as scientific research infrastructure, as required by law. The goal is to assist and guide various firms in increasing resource efficiency and expediting the development of world-class enterprises.

The second aspect of the reforms is "perfecting the system and mechanism for promoting high-quality economic development," with the key being to "improve the institutions and mechanisms for fostering new quality productive forces in line with local conditions," focusing on the development of productive forces characterized by high technology, high efficiency, and high quality.

Adapting to local conditions entails leveraging each region's comparative advantages, resource conditions, and industrial underpinnings to selectively encourage the emergence of new industries, models, and economic drivers.

It is also vital to stimulate and control the growth of angel investment, venture capital, and private equity investment to ensure the healthy and orderly development of developing industries through market-oriented means. Shanghai, at the forefront of China's reform and opening up, a talent hub, and a center for financial and other resources, is advancing the development of a technological innovation center.

Artificial intelligence is a strategic industry that Shanghai is actively promoting. With the recent World Artificial Intelligence Conference as a benchmark, Shanghai is gathering top global talent and resources, developing an industrial ecosystem, creating a diverse range of application scenarios, and establishing an artificial intelligence innovation hub with international competitiveness.

(Zhong Ninghua is a professor at the School of Economics and Management, Tongji University, while Qian Yilei is a doctoral student.)