Events. On April 10, the opinions of the CPC Central Committee and the State Council on accelerating the construction of a national unified market was issued. The opinions defines the key tasks from six aspects: strengthening the unification of basic market systems and rules, promoting the high standard connection of market facilities, creating a unified factor and resource market, promoting the high-level unification of commodity and service market, promoting the fair unification of market supervision, and further standardizing improper market competition and market intervention. The purpose of the opinions is to give further play to the advantages of China’s super large-scale market, establish and improve the national unified market basic systems and rules such as property right protection, market access, fair competition and social credit, break down various policy obstacles in China, reduce institutional transaction costs, and finally form a national unified market.
The state attaches great importance to the construction of a unified market. The Third Plenary Session of the 18th CPC Central Committee proposed to build a unified, open and orderly market system, so that the market plays a decisive role in resource allocation. The 19th CPC National Congress proposed to clean up and abolish various regulations and practices that hinder the unified market and fair competition. The Fourth Plenary Session of the 19th CPC Central Committee proposed to build a high standard market system, improve the fair competition system, and fully implement the negative list system of market access. The Fifth Plenary Session of the 19th CPC Central Committee proposed to improve the basic system of the market system, adhere to equal access, fair supervision, openness and order, integrity and law-abiding, and form an efficient, standardized and fair competition of China’s unified market. On December 17, 2021, when Xi Jinping General Secretary presided over the 23rd Meeting of the Central Committee for comprehensively deepening reform, he stressed that to build a new development pattern, it is urgent to accelerate the construction of a national unified market with high efficiency, standardization, fair competition and full opening, establish a national unified market system and rules, and promote the smooth flow of commodity factor resources on a larger scale. This “opinion” is specially issued, which is in line with the spirit of relevant documents in recent years, and systematically puts forward relevant policies and measures for building a national unified market, fully reflecting the strength and determination of the state to promote the construction of a national unified market.
The purpose of the opinions is to release the dividends of reform and unblock China’s great cycle. At present, China’s economic growth is facing “triple pressure”. In the past, China’s economy relied on real estate and infrastructure in the internal cycle and manufacturing exports in the external cycle. Due to the fact that real estate and infrastructure rely on debt driven and the high leverage ratio of government departments, the positive pulling effect of real estate and infrastructure on the economy is getting lower and lower. Under the background of Sino US trade friction, epidemic impact, Russian Ukrainian conflict and anti globalization, exports will also face an increasingly complex situation in the future, and the manufacturing business environment is not optimistic. Therefore, China should unblock China’s large cycle, especially the manufacturing industry cycle, in the future, so as to hedge the external circulation pressure of manufacturing exports. In order to smooth the national cycle, we need to stimulate the vitality of all kinds of market subjects and release the reform dividend through greater reform. The essence of establishing a national unified market is to further deepen the reform, make the operation of all links of production, distribution, circulation and consumption more smooth, reduce the obstruction in the process of economic internal circulation, reduce transaction costs and improve the efficiency of market operation.
Free circulation of production factors to improve production efficiency. The opinion proposes to remove the obstacles that hinder the market-oriented allocation of various factors of production. Factors of production mainly include: labor, capital, land, technology, information, energy, environment, etc., specifically. (1) Labor level. We should promote the smooth flow of labor and talents across regions. China registered residence rate of 60.6% in 2019, while the rate of urbanization of registered residence population was only 44.4%, and the number of households separated by households was 280 million. The problem of restricting household labor flow in the city was especially evident in large and medium-sized cities. Under the background of promoting the construction of a unified national market, it is expected that the reform of registered residence, housing, education, medical care and social security will impede the flow of talents. (2) Capital and capital level. The opinion proposes to improve the unified social credit system and accelerate the development of a unified capital market. Building a unified social credit system and creating a good social environment is of positive significance to alleviate the financing difficulties of small, medium-sized and micro private enterprises. In terms of the stock market, on the basis of the continuous promotion of the pilot reform of the registration system in recent years and the basic construction of the multi-level capital market system, the next step will further promote the construction of the regional equity market, promote the innovative development of the regional equity market, strengthen the connection and connection with the national stock market, and form a capital market system with clear levels, clear functional positioning, standardized operation and strict supervision. In terms of the bond market, China’s bond market has developed rapidly, and the stock scale has exceeded 100 trillion yuan, becoming the second largest bond market in the world. Relevant departments promote the interconnection of the bond market, which will help to further improve the infrastructure, enhance the attraction of China’s bond market to overseas investors, and promote the further high-quality development of China’s bond market. (3) Land level. The opinions put forward that it is necessary to improve the savings indicators linked to the increase and decrease of urban and rural construction land and supplement the cross regional transaction mechanism of cultivated land indicators; Improve the national unified secondary market for the transfer, lease and mortgage of the right to use construction land. Land transfer income plays an important role in local fiscal revenue and expenditure. In 2021, the national land transfer income accounted for 41.47% of local fiscal revenue and 26.42% of local fiscal expenditure. If the income from land transfer tends to decrease, local finance, especially the economically underdeveloped regions in the central and western regions, will face greater financial revenue and expenditure pressure. Improving the circulation market of land elements and realizing the smooth transaction and circulation of land indicators between urban and rural areas and regions will help to improve the use efficiency of land resources and improve the structure of local fiscal revenue. (4) Technical level. The opinions proposed to improve the unified property rights protection system, accelerate the cultivation of unified technology and data markets, and promote the orderly flow and rational allocation of innovation factors. Taking Guangdong Province as an example, in 2021, the provincial court system accepted 5238 cases of technological intellectual property and monopoly, and 67 cases of punitive compensation intellectual property, accounting for only 1.28%. This means that most intellectual property cases may have the problem of low damages. It is expected that China’s property rights protection will be strengthened and technological resources can flow freely in a wider range. (5) Information level. The opinions proposed to improve the interactive channels of market information. The data infrastructure white paper 2019 shows that in 2018, the scale of China’s digital economy reached 31.3 trillion yuan, accounting for 34.8% of GDP, the contribution rate of digital economy development to GDP growth reached 67.9%, and the contribution of information to the economy increased significantly. However, 90% of Chinese enterprises are still trapped in information islands. It is expected that the attribute of information as a public resource will be strengthened, so as to break China’s information islands, congestion and closure, and further improve the contribution of digital economy to GDP. (6) Energy level. The opinion proposes to build a unified national energy market. The guiding opinions on accelerating the construction of a national unified power market system puts forward that in 2025, the national unified power market system will be preliminarily completed, and the market-oriented allocation of resources across provinces and regions and the scale of green power trading will be significantly improved. By 2030, the national unified power market system will be basically completed, and the power resources will be further optimized nationwide. In 2021, China’s market-oriented trading electricity was 3.78 trillion kwh, accounting for 46% of the total social electricity consumption. It is estimated that the proportion of market-oriented trading electricity in China will increase to 60% and 70% respectively in 2025 and 2030, so as to reduce the overall energy cost of society. (7) Environmental aspects.
The opinions put forward the need to cultivate and develop a unified national ecological environment market. Taking the carbon emission market as an example, the power generation industry has become the first industry to be included in the national carbon market. At present, China’s carbon emission trading market has covered 4 billion tons of annual carbon emissions. In addition to the power industry, during the 14th Five Year Plan period, the national carbon trading market will gradually include petrochemical, chemical, building materials, steel, nonferrous metals, papermaking, civil aviation and other high energy consuming industries. The total annual carbon emissions covered by all these industries are expected to be 8 billion tons, accounting for about 70% – 80% of the national carbon emissions. With the establishment of a unified national ecological environment market, it is expected that the situation of economic development at the expense of the environment in the past will be controlled, and the environment and economy will achieve benign interaction. Generally speaking, the regional free circulation of production factors needs to formulate unified implementation standards and systems at the central level to realize the free circulation of production factors and the efficient integration of production resources, so as to improve the overall production efficiency, reduce the production cost and the price of end products, and finally drive the large cycle of manufacturing and consumption. In connection with the relevant measures taken by the central government to accelerate the market-oriented reform of factors in recent years, stepping up the formulation and formation of a national unified system of relevant systems and rules for the free circulation of production factors, and promoting the efficient allocation of factors in the national unified market will be the main focus of the opinions.
We will improve the income distribution system and tap the potential of national consumption. The opinion proposes to improve the policy of linking the financial transfer payment and the scale of new urban construction land with the citizenization of agricultural transfer population. This is intended to adjust the income structure of residents and achieve the goal of common prosperity. The income distribution of residents will affect the scale and structure of consumption. At present, the unreasonable income distribution of Chinese residents is still prominent, which has restrained China’s consumption potential. This is reflected in the large income gap between residents and the strong consumption tendency of low-income people, but the disposable income is not high, resulting in insufficient effective demand. Although China’s GDP ranks second in the world, its per capita GDP has not yet reached the level of high-income countries, and there is still great potential for residents’ income growth. As long as we adhere to distribution according to work as the main body and multiple distribution modes coexist, give full play to the linkage role of primary distribution, redistribution and third distribution, increase the proportion of residents’ income in national income distribution, increase the proportion of labor remuneration in primary distribution, improve the income level of low-income groups, expand middle-income groups, and gradually realize common prosperity, there is still room for further release of the consumption potential of the people of the whole country.
Reduce the cost of circulation and improve the welfare of end consumers. The opinions proposed to promote the construction of modern circulation system and reduce the circulation cost of the whole society. China’s logistics links are large but not strong, and social logistics costs remain high, so that the prices of end products are mostly falsely high, which inhibits residents’ consumption will. According to Chen Wenling, chief economist of China International Economic Exchange Center: at present, China’s manufacturing products only take 5% – 10% of the time in the manufacturing link, and more than 90% of the time is spent in the circulation link; The average loss of Shenzhen Agricultural Products Group Co.Ltd(000061) logistics links in China is 30%, and that in developed countries in the United States and Japan is no more than 3%; The total cost of logistics in China accounts for 17.8% of GDP and about 8% – 9% in the United States. Although China’s express delivery efficiency ranks first in the world, China’s cost in circulation remains high. The core contradiction between the two is that there are too many intermediary links in China’s circulation, and dealers at all levels increase their weight, making the price of terminal products high. For example, the ex factory price of Feitian Maotai is only 969 yuan / bottle, but the price in the hands of end consumers is usually as high as 3000 yuan, and the circulation link has pushed up the price increase by 2 / 3. The “two vote system” implemented in the field of pharmaceutical circulation in recent years is to reduce the intermediate circulation links of medicine and reduce the medical burden of Lbx Pharmacy Chain Joint Stock Company(603883) . The opinion proposes to build a modern circulation network. Optimize the layout of commercial circulation infrastructure, accelerate the construction of digitization, promote the development of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration, and form more new platforms, new business forms and new models of commercial circulation. We expect that in the future, the circulation field will gradually disintermediate, pursue the flat circulation mode, transform China’s circulation links through the digital and Internet mode, reduce the cost of circulation links, so as to reduce the price of end products and promote the rise of manufacturing and consumption cycle. However, the disintermediation of circulation links can improve the overall welfare level of society, but it will involve many problems of redistribution of interests. It is expected that it will be difficult to implement. We expect that it will be the goal to be pursued in the mid-term of the opinions.
Break down local protection barriers and build a national unified market. The opinion proposes to build a unified national market and break all kinds of closed small markets and self small cycles. In the past, motivated by supporting local industries (especially local state-owned enterprises), local governments in China set high barriers to foreign-funded and foreign enterprises in bidding, preferential policies and market access, which hindered the fair competition system. The opinions emphasizes the need to maintain a unified fair competition system, specifically: (1) local protection and regional barriers should be broken down. Establish a list of enterprise related preferential policies and make it public to the public in a timely manner, and timely clean up and abolish policies in various regions that hinder the unified market and fair competition, such as local protection, market segmentation and designated transactions. (2) Implement a unified market access system, and prohibit all regions and departments from issuing negative lists with the nature of market access. (3) Continue to clean up the regulations and practices in the field of bidding and procurement that violate the construction of the unified market. On the whole, due to the focus on breaking down local protection and regional barriers at the market level, this was the focus and difficulty of China’s reform in the past. Because local state-owned enterprises have a deep binding relationship with local finance and local governments, the reform is difficult, and the progress in the past is generally small. We believe that only from the perspective of state-owned enterprise reform and regional transfer and distribution can we effectively break down local protection and regional barriers. On the one hand, it requires the reform of state-owned enterprises to shift from business management to capital management, improve the marketization of local state-owned enterprises, and weaken the relationship between local governments and local state-owned enterprises; On the other hand, for areas with trade damage, the central government can increase financial transfer payments to balance, so as to reduce the motivation of local protection. The market level involves the balance of interests of local governments. It is the most difficult to promote the reform, which is expected to be the ultimate goal of the opinions.
We look forward to the introduction of relevant supporting policies. The opinions is a comprehensive and programmatic document on promoting the construction of the national unified market, which systematically plans and deploys the construction of the national unified market. It is expected that in the future, relevant supporting measures will be introduced for all links of production, distribution, circulation and consumption involved in the opinions, so as to promote the implementation of the construction of a national unified market.
Investment advice. The opinions aims to reduce production and circulation costs, improve production efficiency and tap consumption potential, which will effectively boost China’s economic vitality. It is suggested to layout from the following four aspects: (1) service enterprises with production factors. For example, leading enterprises such as intellectual property rights and human services may benefit from the national free flow of production factors in the future; (2) Modern circulation network. For example, railway transportation, logistics network and infrastructure, or benefit from the cost reduction and efficiency increase of circulation links; (3) New infrastructure. For example, digital economy, 5g, big data, East West computing, financial infrastructure, etc., or benefit from the construction of national integration and connectivity; (4) Scattered industry of tog (for government customers). For example, leading companies in environmental protection, municipal administration, public utilities and other fields may further accelerate the process of national expansion. On the whole, the opinion is beneficial to private enterprises with strong competitive strength and some state-owned enterprises with high degree of marketization; For regional state-owned enterprises that rely on local relations but have general strength, it is bad.
Risk warning: the implementation of the policy is less than expected; Risks of local governments acting in their own way; The risk of uneven distribution of interests and obstacles to policy promotion.
