Government and market are two important components in the modern market economy system. The key to developing the socialist market economy is to seek the best combination of government behavior and market function, so that government behavior can avoid and overcome its own absence, offside and dislocation while adjusting the economy and making up for the failure of market function. This is an important theoretical and practical problem that must be solved in the process of establishing and perfecting the socialist market economic system in China. 2. Correctly understand the advantages and limitations of the role of government and market under the conditions of market economy. To develop the socialist market economy, we should attach great importance to the role of the government and the market. The main tasks of the government's macro-control and management are to maintain the balance of economic aggregate, curb inflation, promote major structural optimization, safeguard social fairness and justice, and create a good environment and conditions for changing the mode of economic development and maintaining sustained and healthy economic development. At the same time, actively improve and standardize the market access system, establish a unified and standardized modern market system, maintain market order, and ensure that the market plays a fundamental role in resource allocation. However, if the scope and intensity of government management and regulation exceed the reasonable need to make up for the "market failure" and maintain the normal operation of the market mechanism, or if the direction of intervention is wrong and the form of intervention is improper, the result will not only not correct the "market failure", but will inhibit the normal operation of the market mechanism. There are both excessive government intervention and market failure in China's economic system. China's socialist market economic system has been basically established and constantly improved, but there are still many shortcomings in dealing with the relationship between the government and the market, and the role of the government and the function of the market need to be further improved. 4. Promote the reform of economic system with correctly handling the relationship between government and market as the core. It is necessary to thoroughly study and implement the spirit of the 18th CPC National Congress, focus on respecting the laws of the market, give full play to the role of the government, and make overall plans to promote the reform of the economic system. It is necessary to improve the basic economic system, modern market system and macro-control system, speed up the reform of fiscal and taxation financial system, so that the "invisible hand" of the market and the "visible hand" of the government can make full use of their strengths and avoid their weaknesses, effectively play their roles, and promote the continuous improvement of the socialist market economic system.