After 1978, along with tile progress of economic reforms and
maketization, China' s domestic trade put an end to the traditional
highly-centralized planned economic system and realized the
transformation of economic system: domestic trading entities,
traditionally monopolized by the government, have developed into a
multiple competitive pattern, under which standardized companies
coexist with individual businesses ; commodity prices have been
market-oriented rather than valorized by the government ; the
administrative system for domestic trade has gone through a
fundamental change ; market size ranging from commodity, service,
housing to education, medical care and insurance etc has been
constantly growing; market transaction rules have been gradually
improved and perfected, and the domestic trade has been conducted
under a more standard and adequate legal system. Above all, China
boasts a market economy system for domestic trade, which has been
basically put in place and improved increasingly.
(Ⅰ) Changes in Trading Entities
At the beginning of the reform and opening-up, China' s domestic
trading entities were mainly composed of two parts: state-owned
enterprise and cooperative enterprise, and trading activities
conducted by state-owned enterprise constituted the main part of
domestic trade. With the progress of economic restructuring, the
government began to lift its restrictions on village fair trade
since 1979; in 1985, the system of unified and fixed-state purchase
of agricultural and sideline products was abolished; in 1991, the
government carried out a policy of "four decontrols" over
management, price, distribution and employment, and introduced a
system of agency in the field of goods and materials circulation
after 1995. On the one hand, besides the traditional public-owned
enterprises, the reform brought about a great number of individual
businesses, some of which have developed into enterprises that were
duly established according to the Corporation Law and have
played a significant rule in the domestic trade; on the other hand,
the traditional state-owned enterprises have undergone a
transformation in light of the requirements of modem enterprise
system. In the wake of the development of China's opening-up, the
overseas trading enterprises have also joined the domestic trade.
Currently, a pattern, under which various domestic trading entities
can equally compete within the scope of laws, has taken shape.
(Ⅱ) Changes in Pricing Mechanism
Before the reform and opening-up, commodities' prices were
mostly valorized by the Chinese government. In 1978, the
government-priced commodities accounted for 97 percent, 100 percent
and 92.6 percent of the total social retail sales, the total sales
volume of industrial production goods and the total purchase volume
of farm and sideline products respectively. After over 20 years of
the market-oriented reform, such percentage have been changed
greatly and a market-oriented pricing mechanism has fundamentally
come into being. According to the Pricing Catalogue of the State
Development Planning Commission and Relevant Departments under the
State Council (2001), the number of the commodity and service items
priced by the government was reduced to 13 in 2001 from 141 listed
in the 1992 Pricing Catalogue. The 13 items included important
reserved materials designated by the central government, products
monopolized by the government, certain fertilizers, certain key
drugs, textbooks, natural gas, water supply of irrigation works
directly under control of the central government or crossing more
than one province, power, military supplies, key transportation
service, basic postal service, basic telecom service, special
service etc. In addition, fees collected by the governmental
agencies, prices of finished oil products and reference prices and
public prices of urban land have started a further reform, and the
price formation mechanism has been improved by degrees.
(Ⅲ) Changes in Government Administrative
System
In the domestic trade, changes in the government administrative
system are mainly revealed in two aspects:
First of all, in order to adapt to the development of domestic
market economy, the government organs removed or merged their
original administrative departments, undergoing a gradual
transition from an administration pattern characterized by issuing
orders to a management pattern with an adequate legal system.
Second, the domestic trade experienced a transition from an
administration pattern characterized by issuing orders to a control
pattern with an adequate legal system, and in particular in the
price administration, more stress was laid on the legal system.
Table 6-2 indicates the important documents regarding price
administration enacted and put into force by the Chinese government
since the reform mid opening-up.
The changes of the trade administrative organs and the
formulation of the relevant price laws and regulations imply that,
in the domestic trade, the scope of administration has been
shrinking and gradually disappearing, and that the governmental
administration has been brought into line with an adequate legal
system.
(Ⅳ) Expansion of Market Size for Domestic
Trade
In the traditional centrally planned economic system, there were
only partial articles and services allowed to enter market for
deal; while production goods were not regarded as commodities, and
articles and services in many fields were distributed as welfare in
kind or under the supply system. With the advancing and deepening
of the reform, such a traditional distribution system was broken,
and many articles that used to be allocated with a welfare nature
have been allowed to enter market, having become trading objects,
of which the most important are housing, health care and education
etc.
1. Marketization of Housing
Shortly after the founding of the P. R. C., China carried out a
housing construction, administration and utilization system, under
which houses were built, distributed and used at low rent mad under
unified control, i.e., a low rent welfare system. In 1980, the
program of the commercialization of housing was brought forward in
the Report Outline of the National Basic Construction Work Meeting.
In 1986, the Housing Reform Leading Group was established under the
Sate Council. In 1988, the Notice of the State Council on Pushing
Forward the Housing System Reform Program in Urban Areas in
Installments and Batches was enacted, and the objective of
commercialization of housing was reaffirmed. In addition, in 1998,
the State Development and Planning Commission pointed out that a
stress should be laid on the development of housing services of
urban residents, and a housing development and operation system
established and perfected by speeding up the commercialization of
housing, and strengthening the development of economical and
practical houses and the enforcement of comfortable housing
project. By 2001, the traditional welfare house distribution
mechanism has faded out and the market price formation mechanism
for house price and rent has been initially established.
2. Marketization of Medical mid Health Care
Services
In 1978, the initial stage of the reform, the medical and health
care service system featm-ed welfare. In 1988, the implementation
of Opinions on Relevant Issues of Expanding Medical and Health
Services launched the reform of price of medical mad health
service. In 1997, Decision of the Central Committee of the CPC and
the State Council on Health Reform and Development was promulgated
aiming at pushing forward the reform of medical system based on the
principle of "three concurrent reforms", that is, concurrently
carrying out reforms in medical insurance system, health system and
drugs circulation system. By 1999, file reform of medical system
was carried out nationwide, and after the reform patients began to
enjoy more freedom in medical care. In 2001, the General Office of
the State Council forwarded the Notice Opinions on Guiding the
Reforms in Urban Medical and Health System prepared by the System
Restructuring Office of the State Council and other governmental
organs, which defined the direction of the reform in medical and
health system. Meantime, 13 supporting policy papers were also
issued, including systematic control over medical institutions in
cities and towns, control separately over income and expense of
hospital drugs, related taxation policies on medical institutions
and subsidy policies on health facilities etc. With the
promulgation of these supporting documents, China' s reform in
medical system entered a new stage of practical operation.
3. Expansion of Education Charging Items
The years after the reform and opening-up witnessed that the
proportion of a resident' s expenditure in education in his or her
total consumption has increased. According to relevant provisions
of the Education Law of the People ' s Republic of China (1995),
China carried out the policy that incidental expenses should be
collected for the compulsory education arid tuition fees for the
non-compulsory education. In 1996, the State Education Commission,
the State Planning Commission and the Ministry of Finance jointly
formulated the Provisional Measures on Administration of Charges in
Compulsory Education Schools, the Provisional Measures on
Administration of Charges in Ordinary High Schools, the Provisional
Measures on Administration of Charges in Secondary Vocational
Schools mad the Provisional Measures on Administration of Charges
in Institutions of Higher Learning. Since 1994, in the higher
education, the system of guarantees for education and employment
has been changed into a system of "self-paid study, self
employment"; in 1997, there was only one single national enrollment
quota program for universities or colleges reserved in the national
education system, canceling the dual programs of state quota and
regulated quota (finance supported by some community and
self-supported in finance); by 2000, the government has basically
completed the transformation of the enrollment mad employment
system involved in the reform of the higher education, and the
government financed student has become a history in the higher
education.
(China.org.cn November 7, 2003)
