Skyscrapers in Beijing's central business district as seen from Jingshan Hill, Aug. 12, 2024. [Photo/Xinhua]

At China's Central Economic Work Conference held in Beijing from Dec. 10-11, policymakers made clear that managing the economy under new conditions is not a choice between loosening control and tightening regulation. Instead, they emphasized the need to ensure both market vitality and effective regulation.

This approach departs from the binary thinking that often dominates external interpretations of China's economic policy. Rather than framing the relationship between state and market as a zero-sum trade-off, Chinese policymakers increasingly present the two as mutually reinforcing.

A high-standard socialist market economy provides an important guarantee for Chinese modernization. In this context, unleashing market vitality does not amount to deregulation without limits, nor does regulating effectively imply heavy-handed administrative intervention. The former is aimed at dismantling institutional and structural barriers that constrain productivity and innovation; while the latter focuses on building a rule-based, credit-oriented economic order. Both serve the overarching goal of achieving high-quality development.

This policy orientation is consistent with China's long-term development framework. The Recommendations of the Central Committee of the Communist Party of China (CPC) for Formulating the 15th Five-Year Plan for National Economic and Social Development reiterate the needs to see that the market plays the decisive role in resource allocation and that the government better fulfills its role, calling for the establishment of a unified, open, competitive and orderly market system.

Allowing the market to function more dynamically is widely regarded as essential to strengthening endogenous growth. This includes removing barriers that hinder the development of market entities and fostering new quality productive forces tailored to local conditions. It also involves improving the efficiency of factor flows by advancing the development of a unified national market, allowing goods, services, capital, technology, talent and data to circulate more freely and be allocated more efficiently. Strengthening the role of enterprises as the main drivers of technological innovation remains another key priority, supported by institutional arrangements designed to foster a pro-innovation environment.

Yet greater market vitality alone is not seen as sufficient; effective governance remains central to ensuring stability and sustainability. In policy discussions, this is framed less as tightening control than as correcting market failures and safeguarding fairness. Improving macroeconomic governance, ensuring regulation is transparent and predictable, and preventing risks in key areas continue to rank high on the agenda. At the same time, authorities have highlighted the importance of strengthening safeguards in non-traditional security domains such as cybersecurity, data security and biosafety, while keeping employment, growth and expectations broadly stable and improving access to basic public services.

This dual approach has been reflected in a series of policy moves. Measures include a document on strictly regulating administrative inspections on companies, a guideline for building a unified national market, steps to tackle "rat race" competition, and further reductions to the negative list for market access. Together, they form a targeted policy package that seeks to energize market activity while reinforcing institutional discipline.

"Letting go" and "regulating" are viewed as mutually reinforcing. Expanding market space helps define the boundaries of government action and avoids stifling initiative through overregulation. Sound governance, in turn, provides the necessary rules and safeguards that allow market forces to operate without veering into disorder.

This balance has evolved over time. From the 14th CPC National Congress, which proposed allowing the market to play a basic role in resource allocation under macroeconomic regulation, to the third plenary session of the 18th CPC Central Committee, which elevated the market's role to a decisive one while calling for better government performance, China's reform agenda has gradually refined the relationship between state and market.

A subtle but telling shift emerged at this year's conference. Last year's emphasis on keeping risks under control reflected a priority on stability amid heightened uncertainty. This year's call for effective governance places greater weight on development quality, efficiency and vitality, signaling a move from simply preventing problems to actively enabling growth. It also points to a changing conception of government itself: less an all-encompassing administrator, and more a combination of service provider and impartial referee.

For external observers, the message is less about short-term stimulus than about policy method. By pursuing a more calibrated integration of market dynamism and effective governance, China is seeking to preserve economic resilience in a more volatile global environment, consolidating gains made during the 14th Five-Year Plan period (2021-2025) and ensuring the 15th Five-Year Plan (2026-2030) gets off to a good start.

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编辑：呼乐乐