Abstract:

The modernization of the nation’s governance system and governance capacity is an important aspect of China’s path to modernization. Governance of the socialist market economy encompasses multiple aspects such as government governance, market governance, social governance, and corporate governance. But at its core is the proper handling of the relationship between government governance and market governance. Building an effective market and a proactive government, and enabling them to synergize, is a hallmark of the modernization of the national governance economic system and governance capacity in the socialist market economy. The integration of an effective market and a proactive government is a worldwide economic challenge that needs to be addressed in practice. In the Chinese context, solving this problem means coordinating the relationship between an effective market and a proactive government to form an economic order that is both flexible and controllable. From the perspective of the national governance system, the subject and object of regulation are the government and the market, respectively; market flexibility and control rely on the governance capacity of the country. The modernization of the national governance system includes the modernization of the market economy system that regulates resource allocation. Proactive government does not mean replacing or controlling the effective operation of the market, but rather acting in areas where the government should play a role, including overcoming market failures and regulating market order. A proactive government needs to avoid government behavior failures and build an efficient government in its own reform.

Key words: national governance system, effective market, proactive government