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Experts explore government-market interaction

Author  :  WEI SIYU     Source  :    Chinese Social Sciences Today     2020-10-23

Staff members of an electric blanket manufacturer present a product via the livestreaming platform of online Canton Fair in Qingdao, east China’s Shandong Province, Oct. 15. The 128th edition of Canton Fair kicked off online in south China’s Guangdong Province the same day. Photo: Liang Xiaopeng/XINHUA

International experts discussed the interaction between government and the market at the Second Annual Conference of Government and Economics held in Beijing in late September.

Government and the market will always be the two core themes of market operations, said Dong Zhiyong, dean of the School of Economics at Peking University. Reform and opening up is a process in which the government gradually returns to its position as a referee and releases the vitality of market entities. 

David Daokui Li, director of the Academic Center for Chinese Economic Practice and Thinking at Tsinghua University, said that economic researchers should clarify Chinese practices, and from China’s special economic practices extract significant new knowledge which can be accepted by international counterparts and can eventually be written into the economics 101 courses in global universities.

Eric Maskin, Nobel laureate in economics and Harvard University professor, analyzed causes for the lack of COVID-19 testing kits in the United States from the perspective of mechanism design and proposed countermeasures. He noted that the government should flexibly use the idea of mechanism design to overcome the shortcomings of information asymmetry in a crisis. A good mechanism can effectively stimulate the production of test kits in the private sector and maximize social welfare. 

The profound insights of economics have real value only when they influence policies and are put into practice, Maskin said. As such, effective communication between economists and policy makers is essential.

Erik Berglof, chief economist of the Asian Infrastructure Investment Bank, explained the importance of improving national capabilities from the perspective of economic transformation and development, emphasizing that the transformation and improvement of economic structure and institutional mechanisms should be carried out in tandem. Enhancing national capacities and positive interactions with the private sector can help drive growth, foster innovation and bring lasting prosperity. 

The private sector has certainly played an important role, but the public sector has been indispensable in promoting financing, diversifying risks, strengthening supervision and improving the welfare of all people, Berglof noted. As such, the active participation of the public sector, the establishment and improvement of institutional mechanisms, and the creation of a macro environment are also vital.

The digital economy will help to effectively deal with the impact of the COVID-19 pandemic. When talking about the current development of the digital economy, Zhu Guangyao, former vice finance minister of China, said that logistics, information flow and the data stream are the most valuable elements of the digital economy. China has a huge capability for logistics provided by the world’s most convenient transportation infrastructure, enormous information flow generated by the world’s most extensive communications base station infrastructure, and the immense data stream generated by the world’s most widely used electronic payment system. 

China has made considerable progress in the hardware of the digital economy, gaining a comparative advantage in the digital economy, Zhu said. In the future, more attention needs to be paid to the establishment of a macro policy framework for the digital economy, as its impact on the digital economy is decisive.

Editor: Yu Hui

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