Toward a unified national market during China's 15th Five-Year Plan period

By Lin G. 6 décembre 2025

Beijing Capital International Airport's terminal building is seen in the same frame as the city's CBD skyline, Beijing. /VCG

China's 15th Five-Year Plan (2026-2030) emphasizes further improvement in market-based allocation of economic factors and the removal of obstacles to a unified national market. This reinforcement affirms that the Chinese market's most distinctive advantage lies in its scale and underscores the importance of eliminating market fragmentation. Two key concepts are central to understanding the idea of a unified national market: The positioning of the market under the system of socialism with Chinese characteristics; and the significance of a unified national market.

The market is not merely a concept imported from Western economics. Under the system of socialism with Chinese characteristics, it is an essential institutional component that operates in harmony with the principle of work-based income distribution. In other words, the functioning of markets does not conflict with the socialist distribution framework. Recognizing this dispels the misleading binary between Western-style markets and socialist governance of the economy.

Markets function as the primary mechanism for resource allocation, where prices reflect critical information for coordinating factors of production. From the perspective of mainstream economics, prices are determined by the interaction of supply and demand. From the theoretical tradition of socialist political economy, the notion of socially average labor time provides a measure of value.

In most cases, when markets operate across sufficiently large, integrated spaces and approach equilibrium, prices determined by supply and demand tend to align with the value determined by the social average labor time reflected in production. These insights are complementary rather than contradictory, highlighting how the market mechanism is compatible with and constitutive of the socialist market economy with Chinese characteristics.

The term "nationally unified" carries concrete practical significance. Highlighting unity acknowledges that, in some sectors and regions, the market has historically been fragmented into local enclaves. Such fragmentation often manifests as regional market segmentation and exclusionary practices.

Two main groups have contributed to these outcomes. One consists of regionally based enterprises that hold dominant positions within their local areas. The other involves local government actions that tend to favor domestic firms. The reasons for these patterns are understandable: Maintaining local tax revenue, supporting home-grown companies so they can compete nationally, and safeguarding employment and social stability as local priorities.

However, when these motives solidify into persistent local bias, the consequences are clear: Duplication of similar industries across provinces, inefficient allocation of resources, and delayed exit of uncompetitive producers. In essence, transitioning from many smaller, protected markets to a unified national market strengthens price signals, enhances the allocation of factors, and improves overall economic efficiency.

Moreover, a unified national market significantly reduces the space for rent-seeking. When markets are segmented, incentives to obtain supra-market returns through non-productive means persist: Administrative preferences, discriminatory treatment, and other channels that divert attention away from improving products and services. While enforcement and oversight can address symptoms, the deeper remedy lies in institutional design.

A genuinely unified national market changes the incentive structure: It reduces the conditions where local rents can be sustained. At a national scale, the ability to extract and maintain localized privileges is limited, shifting the equilibrium toward genuine competition based on business substance rather than artificial protection.

A unified national market provides significant advantages for foreign institutions seeking to operate in China. At first glance, the connection between national market integration and foreign participation may seem indirect. In practice, however, foreign entities must navigate both competition with domestic firms and interactions with multiple levels of government. Without a fully unified market, a foreign institution that has established access at the national level would still face the cumbersome task of navigating regulations in each locality – a process that is both time-consuming and resource-intensive.

The challenge is particularly evident for institutions attempting to expand beyond major urban hubs. For example, foreign financial institutions may be highly active in Beijing, Shanghai, or Shenzhen, yet many second- and third-tier cities also have substantial market potential. In these areas, local institutions often hold strong influence, which can create barriers to entry. A unified national market helps mitigate such fragmentation, enabling foreign participants to access broader markets more efficiently, without repeatedly negotiating local entry or navigating uneven regulatory environments.

A unified market does not negate the value of local advantages. Regional strengths remain legitimate and can coexist with foreign participation. In fact, the presence of foreign institutions can introduce complementary capabilities that contribute to overall market competitiveness. By encouraging foreign and domestic actors to compete on business capabilities rather than local protection, a unified market can help improve outcomes for many participants.

Viewed from a deeper perspective, building a unified national market is not a zero-sum endeavor. Greater integration broadens demand, promotes specialization, and enlarges the economic "pie." While some entrenched privileges will inevitably diminish – a necessary and constructive adjustment – the overall outcome is a more dynamic market that allows a wider range of participants to engage and thrive.

Amid an uncertain global economic environment, advancing a unified national market strengthens the efficiency of resource allocation, thereby enhancing domestic competitiveness. At the same time, a more integrated and transparent market provides foreign participants with a predictable and accessible environment, allowing them to engage more fully while reinforcing healthy competition across regions. This alignment of efficiency, openness, and competition under the 15th Five-Year Plan is meant to enhance the resilience of the Chinese economy.

Editor's Note: Lin G. is a CGTN economic commentator. The views expressed in this article are the author's own and do not necessarily reflect those of CGTN.