The development of the economic system with public ownership playing a dominant role and diverse forms of ownership developing side by side is a basic characteristic of the socialist economic system at the preliminary stage. This is decided by the quality of socialism and the national situation in preliminary stage: first, China, as a socialist country, should persist in public ownership as the base of the socialist economy; second, China, as in its preliminary stage, should develop diverse forms of ownership on condition that the public ownership plays a dominant role; third, all forms of ownership compliant with "Three Represents" are serving socialism.

The public economy consists not only the state-owned economy and the collective economy, but also the state-owned and collective component in the mixed-ownership economy. The dominant position of the public ownership is represented that: the public assets have a dominant proportion in the overall assets of the society; the state-owned economy controls the lifeline of the national economy and plays a leading role in the economic development, as is from the aspect of the whole country. There might be some difference in some places and industries. The dominant position of the public economy requires dominance in quality, but also its improvement in quality, which is of more important. The leading function is best showed in its controlling power. As long as the public ownership plays a dominant position, the State controls the lifeline of the national economy, the controlling power and competition forces of the state-owned economy are strengthened, under these conditions, less state-owned economy will not affect the socialist property of China.

The collective economy is an important part of the public sector of the economy. The collective economy can show the common prosperity policy, absorb scattered capital in the society, lessen the employment pressure, and increase the public accumulation and the state revenue. We should support, encourage and help the development of diverse forms of collective economy. This is of great significance in playing the dominant role of the public economy.

The public ownership may assume diverse forms. All operation methods and organization forms that reflect the law of socialized production can be adopted. The stockholding system is a capital organization system for modern enterprises, in favor of separating the ownership from managerial authority, improving the operation efficiency of enterprises and capital, and can be applied in the socialist market economy in China. The state or collective-controlling sector is obviously public, and is good for enlarging the dominant scope of the public capital, strengthening the dominant position of the public economy. The diverse forms of shareholding cooperative economy in urban and rural areas are fresh things, which should be supported and guided for gradual improvement by summing up experience continuous. We called for and encourage collective economy with the labor's labor association or capital association playing a dominant role.

Non-public sectors of the economy are an important part of the socialist market economy in China. We encourage and guide the continuous and healthy development of such non-public sectors of the economy as individually-owned and privately-run businesses.

State-owned enterprises (SOEs) are the backbone of the national economy of China. Establishing modern enterprise system is the direction in the SOE reform. In line with the requirement of "clearly established ownership, well defined power and responsibility, separation of enterprise from administration, and scientific management", the standard corporation reform will turn enterprises into corporative entities and competition subjects adapting the market. The government should not be directly engaged in the operation of enterprises and enterprises cannot be free of restriction of owners and harm the owners' rights and interests.

Merger, standard bankruptcy, laying-off, reposition, downsizing for efficiency and re-employment programs are applied and encouraged to form a survival-of-the-fittest competitive mechanism for enterprises.

We should establish efficient systems for the management, supervision and operation of state-owned capitals, to secure the maintenance and appreciation of the state assets value and prevent the loss of state assets. We should establish social security system, carry out endowment and medical insurance systems by combining the comprehensive planning of the society and personal accounts, and improve unemployment insurance and social aid systems to provide fundamental social security. We should set up urban house public accumulation fund to speed up the house system reform. We should stick to the distribution system under which distribution according to work is dominant and a variety of modes of distribution coexist.

China will accelerate the marketization process of the national economy, continue to develop all verities of markets, focusing the development of the market for production factors including capitals, labors and technologies to improve the price forming mechanism of the production factors. We should reform the circulation system, complete market regulations, strengthen market administration, clear off market obstacles, break regional blockage and departmental monopoly, to build a uniform open market system with orderly competition as soon as possible and further play the fundamental role of the market in resources allocation.