The changes promised in a report issued after a closely watched Communist Party conference could be China's biggest economic overhaul in two decades. State media have compared the effort to market-style reforms in 1978 that launched China's economic boom.
Chinese leaders are under pressure to replace a growth model based on exports and investment that delivered three decades of rapid growth but has run out of steam. Reform advocates say Beijing must curb the privileges and dominant role of state companies they say are inefficient and a drag on growth.
In Friday's report, the ruling party pledged to ease barriers to private competitors in markets controlled by state companies, though they reaffirmed that government-owned industry is the core of the economy.
"We must promote orderly opening to the outside," the report said.
It left out many details of what role private or foreign competitors might be allowed in government-controlled industries such as energy, telecoms and finance. But it outlined changes clearly intended to make industries more efficient and productive by injecting more competition.
It promised measures such as allowing the creation of privately owned banks and use of market forces to allocate resources. Both would help dynamic private companies that create most of China's jobs and wealth but struggle to get financing.
As for foreign companies, the report pledges to ease limits on foreign investment in e-commerce and other industries.
In a move possibly aimed at responding to the rapid aging of China's population, the report said the ruling party also will ease the country's "one child" birth policy. It said the party will allow couples in which one partner is an only child to have two children.
Beijing says its three-decade-old birth policy, which is widely disliked by many Chinese couples, has helped the country by slowing population growth and conserving resources. But as the average age of the country's population of 1.3 billion people rises, Chinese leaders worry there will not be enough workers to support a growing group of retirees.