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Trade trend -> China's economy section II

China's economy section II


Section  II:  Commercial  Environment

Over the 20-odd years since China¡¯s reform and opening to the outside world, income level of the Chinese people has been ever increasing and their personal assets have been continually growing. Houses, cars, computers, stock and travelling abroad have become the main contents of the people¡¯s investments or consumption in the daily life. By 2003, calculated at the prevailing foreign exchange rate, China¡¯s per-capita GDP has topped 1000 US dollars.

The 20 years after 1997 was the period in which China¡¯s economy was growing the fastest and the residents¡¯ income was increasing the most. Statistics have shown that in 2003 the per-capita net income of the rural residents was 2622 yuan, rising actually 5.9% over last year; while the per-capita disposable income of the residents in cities and towns was 8472 yuan, an actual increase of nearly 10%.

In terms of the Engel¡¯s coefficient ( proportion of the expenditure on foods in the total expenditure for consumption ) for the consumption of the residents, the coefficient for residents in cities and towns dropped from 57.5% in 1978 to 37.1% in 2003, a drop of 0.6% over last year; the coefficient for rural residents dropped from 67.7% to 45.6%, a drop of 0.6% over last year.

I. Pricing Policies

China currently applied a mechanism of market-based pricing under macro-economic adjustment.  There were presently three types of prices:  government price, government guidance price and market-regulated price.

The government price was set by price administration authorities and could not be changed without the approval of these authorities. Products and services subject to government pricing were those having a direct bearing on the national economy and the basic needs of the people¡¯s livelihood, including those products that were scarce in China. Meanwhile, government pricing was productor service-specific, regardless of the ownership of the enterprises concerned. National treatment was applied in the areas of government pricing for all imported goods.

The government guidance price mechanism was a more flexible form of pricing.  The price administration authorities stipulated either a basic price or floating ranges. The floating range of guidance pricing was generally 5 per cent to 15 percent.  Enterprises could, within the limits of the guidance and taking into account the market situation, make their own decisions on prices.  With market-regulated prices, enterprises were free to set prices in accordance with supply and demand to the extent permitted by generally applicable laws, regulations and policies concerning prices.

China would apply its current price controls and any other price controls upon accession in a WTO‑consistent fashion, and would take account of the interests of exporting WTO Members as provided for in Article III: 9 of the GATT 1994.

 II. Diversified Economic Forms Co-existing

 By 2003, economies under blended ownership have accounted for 40% or so of the China¡¯s overall economy. After another 5-10 years, such a percentage will reach 80% or so. Experts think that economies under blended ownership will become a public ownership dominating the basic socialist economic system.

 In 2003, the National Asset Supervision and Management Commission approved the assignment of properties and equities undergoing in 48 state enterprises, concerning national asset and equities amounting to 22.5 billion yuan. A series of practices have shown that the strategic readjustment of the layout and structure of the Chinese national economies in real sense has just begun, and merger and restructuring will become the main forms in realizing the strategic readjustment of the national economies.

III. Policies on Competition

 The Chinese government encourages fair competition and opposes various kinds of unfair competitions. [ Law of the People¡¯s Republic of China Against Unfair Competition ], formulated on September 2, 1993 and implemented on December 1st of the same year, is now a basic law safeguarding market competition order. Besides, [Price Law], [ Law on Inviting Tenders and Tender Bidding], [ Criminal Law] and other relevant laws also embody regulations against monopoly and against unfair competition. China now is drawing up [Law against Mon- opoly].

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