Abstract: The current regional disparities of development during the period of economic transition, results not onlyfrom historical heritage, but also from the disparities development strategy implemented after the reform andopen policy. It is impossible to solve the problem purely relying upon market mechanism or upon adiministrative power, without the co-operation between the two sides. Although it is right in prinaple that efficiencyshould be given priority while taking into account social justice, the latter has been in many cases not fully embodied in government stratagy of development. It is an urgent undertaking to rationally reconstruct the relationship between government and market, which is the precondition to bring the ever-extending regional disparities under control.