Abstract: Enterprises controlled by local governments are resources, tools, and means for local governments to command and regulate economic operations, which also generates motives and purposes for the local governments to intervent the market. This is one of the important manifestations and reasons for the formation of administrative regional economy. Under the institutional arrangements where local governments have strong economic functions, this control model may become one of the main obstacles to the construction of a unified national market. To build a unified national market, it is necessary to not only reform the functional structure of local governments and the way they implement industrial policies, but also adjust their relationship with enterprises under their control, and eliminate their tendency to use these enterprises to promote closed small markets and self-contained circulations.
