China has just concluded its annual "Two Sessions," where building a unified national market was highlighted as a key policy priority to reinforce the domestic economy amid global uncertainties.

The initiative aims to remove regional barriers, improve the nationwide flow of resources and create a more efficient and predictable business environment. Analysts say it will unlock greater economic potential and provide more opportunities for the global market.

Building a unified national market focuses on five key areas: unifying market institutions and rules, improving connectivity of market infrastructure, integrating markets for production factors and resources, creating unified markets for goods and services, and ensuring fair and consistent market regulation. Authorities have also pledged to curb improper competition that distorts market dynamics.

Removing local barriers

Unifying market rules is seen as the most immediate step in building a nationwide market.

For years, differences in market access rules, regulatory standards and policy implementation across regions have created obstacles for businesses operating beyond their home provinces. In some cases, local governments have restricted outside companies from participating in public tenders or imposed entry barriers in sectors such as construction or new-energy vehicles.

Such practices raise operating costs for companies expanding across regions and limit the efficient allocation of resources.

Su Jian, professor at the School of Economics at Peking University and director of the university's National Economic Research Center, said unified rules and regulatory standards would significantly improve the predictability of China's business environment.

"A unified system of market rules, standards and supervision can create a fairer, more transparent and predictable institutional environment," Su said. "This will boost the confidence of market players to expand investment, strengthen research and development and scale up production."

To address these issues, Chinese authorities launched a nationwide campaign in April 2025 to eliminate market access barriers. The National Development and Reform Commission, together with other ministries, jointly reviewed restrictions in sectors including used car trading, pharmaceutical retail, construction and transportation.

One case involved a county-owned enterprise that established a local contractor registry requiring companies to be registered within the county, effectively excluding outside firms. Regulators ordered the registry to be abolished.

Since the campaign began, authorities have reviewed more than 38,000 policy documents across the country and revised or scrapped over 2,300 rules that lacked legal basis or improperly restricted market entry.

Improving the flow of production factors

Beyond standardizing rules, the deeper objective of the unified national market is to enable the efficient flow of production factors – such as land, labor, capital, technology and data – across China's vast economy.

In the past, regional segmentation limited factor mobility and reduced efficiency in resource allocation. Reforms aimed at building a unified market seek to gradually dismantle these barriers.

Key measures include improving the secondary market for the transfer, leasing and mortgage of construction land-use rights, establishing unified systems for registering movable asset collateral to facilitate financing, and promoting the sharing of major scientific research facilities across regions.

China is also building nationwide trading markets for carbon emission rights and water-use rights, while introducing unified industry standards and regulatory mechanisms.

These reforms have begun to reshape the economy. In 2025, Henan Province completed the first cross-ownership supply of state-owned and collectively owned construction land, allowing urban and rural land to enter the market on equal terms. The reform shortened the land acquisition cycle for businesses by about 60 percent.

In another example, 18.76 million kilowatt-hours of green electricity from Qinghai Province was delivered to northeastern China for the first time through coordinated grid operations across Qinghai, Beijing and Jilin, enabling cross-regional power trading.

Addressing destructive competition

While removing regional barriers can improve efficiency, building a unified national market also requires maintaining fair competition.

In recent years, some industries have experienced intense price competition, sometimes described in China as "involution-style" competition. Authorities increasingly view such practices as a form of unfair competition that undermines healthy market development.

This year's government work report emphasized the need to strengthen anti-monopoly enforcement, crack down on unfair competition and comprehensively address destructive price wars while advancing the unified national market.

Wu Gangliang, a researcher at the China Enterprise Reform and Development Society said that the "involution-style" competition is essentially a form of unfair competition. He noted that the government has elevated efforts to curb such practices to a key initiative in advancing the building of a unified national market.

According to Wu, addressing "involution-style" competition will significantly boost business confidence and help accelerate industrial upgrading. "With a fairer competitive environment, companies will no longer need to rely on price wars," Wu said. "Instead, they can devote more resources to technological innovation, product development and brand building."

Authorities are shifting toward a combination of policy tools - including capacity regulation, industry standards, price enforcement and quality supervision - to address the issue.

In 2026, regulators are also expected to further intensify oversight of local policies related to investment promotion, tax incentives, fiscal subsidies and public procurement to ensure they comply with fair competition principles.

Chen Qiangyuan, professor at Renmin University of China, said a unified national market will strengthen China's domestic economic cycle, helping offset global uncertainties while creating opportunities for international businesses.

"Advancing the unified national market helps use the stability of domestic circulation to offset uncertainties in global markets," Chen said. "At the same time, a fully open and unified Chinese market will attract advanced global resources and create significant opportunities for the international community."