Abstract: Based on the basic socialist economic system, this article focuses on how to make state-owned capital stronger and better through marketization in the context of fair competition. The development of state-owned economy supports the improvement of national capacity. Sufficient national capacity is conducive to promoting economic growth, providing excellent social public goods, solving many important social problems, and supporting the national economy. Strengthening and optimizing the state-owned capital is the basic way to strengthen the national capacity. Fair competition in market economy has three constraints on state-owned capital: budget constraint, property right constraint and market position constraint. To make the state-owned capital stronger, we should not only follow the property of capital, but also rely on the law of market. The state-owned enterprises become the main body of the market, which can promote the state-owned capital to strengthen itself in the market competition. The improvement of state-owned capital requires not only the optimization of the state's behavior as the owner of state-owned capital, but also the optimization of the governance structure of state-owned enterprises, the improvement of the entrepreneur selection and incentive system, and the optimization of the investment layout of state-owned capital in high-tech industries. With the help of capital accumulation, especially capital concentration, state-owned capital can be rapidly enlarged. Mixed ownership is a concrete and effective form of realizing the expansion of state-owned capital, but it is necessary to establish a corresponding mechanism to prevent the problems of state-owned capital's "turning public into private", "removing from reality to virtual" and unlimited capital expansion. The strengthening and excellence of state-owned capital does not come at the cost of weakening the private economy, but it complements the strengthening and excellence of private capital in fair competition. This is an important feature of the socialist economy with Chinese characteristics.
