Welcome to the Third Annual Conference of Government and Economics. Please allow me to take a moment to introduce the basic background of this annual international conference, which is co-sponsored by the Society for the Analysis of Government and Economics (SAGE) and is being held for the third time.

        Government and economics is a branch of economics that has been carefully planned and constructed by a group of scholars from Tsinghua University in conjunction with international economists over the past three to four years. As a new branch of economics, government and economics has three basic premises, the first being that government has become an extremely active and important player in the modern market economy. Essentially all modern government expenditures account for more than 30% of GDP, and for many countries, more than 50% of GDP. This proportion is continuously increasing, especially in the wake of natural disasters, epidemics, and international financial crises. The second premise is that the behavior of the government determines whether an economy will be able to develop well, run smoothly, and avoid financial crises. The third basic premise is that beneficial or detrimental government behavior is determined by a series of mechanisms that influence the behavior of government employees and policymakers. So, in government and economics, we are trying to understand what role government plays in a modern market economy and which government mechanisms result in the most compatible government and market behavior so as to allow the market economy to unleash its maximum development potential.

        Why is it that Chinese scholars, together with a group of international scholars, have set out on this venture together? We have thought about this extensively, including more than three years ago, when we were working on a project to summarize China’s experience over 40 years of reform and opening up. Our group of domestic scholars, along with international scholars, agreed that China’s past 70 years of development, and even past 150 years of development, demonstrate a major lesson. That is, in order to foster economic development, the relationship between the government and the market must be well-managed, including government behavior and incentives. We believe that modern economics has not paid enough attention to this fact, which is why we decided to found the field of government and economics. 

        Of course, we also hope that by creating such a new discipline, we can bring the economics research of Tsinghua University and even of the whole country to a higher level. Through this research, we also hope to help the world better understand China, and on the basis of that understanding, to accept some of China's current effective practices for managing problems within the market economy. This is why we established the Academic Center for Chinese Economic Practice and Thinking at Tsinghua University, with the acronym ACCEPT, in the hope that through our academic research, international colleagues can come to accept China's economic thought and practice on the basis of understanding. This is also the original intention of our international conference.