Before the reform and opening was introduced, most
commodities on the Chinese market were priced by the state.
But since the start of the reform and opening, along with
the expansion of the commodity market scale and the change
of the relations between commodity supply and demand, the
state has carried out price reform step by step and
according to plan. The fixing of prices by the state follows
three forms: the fixing of price by the state, state guiding
prices and market regulatory prices. The market regulatory
price has been gradually relaxed—By 1999 the pricing
of 95 percent of consumer goods and 80 percent of investment
goods had been relaxed. These prices were regulated mainly
through the relations between market supply and demand. A
socialist market pricing mechanism is gradually taking
shape.
In the pricing system the irrational
state of basic product prices being too low has been
improved, and the pricing structure is becoming more
rational, step by step. Comparing 1998 with 1978, the index
of the retail sales prices of rural industrial products
increased by 3.88 times; and the index of the synthetic
relative prices between industrial and agricultural
commodities was 59.7 percent. Besides, the price scissors in
the exchange of industrial products for agricultural
products were alleviated. In 1998, the prices of
agricultural products increased by 5.83 times, compared with
those of 1978, and the prices of industrial products by 2.95
times, and their price ratio was 0.6 : 1. In accordance with
the requirements of the socialist market economy, China has
been establishing a pricing mechanism macro-regulated and
controlled by the government, and fixing prices through the market.
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