French minister warns Chinese textile imports menace 7,000 more jobs

French minister warns Chinese textile imports menace 7,000 more jobs
FRENCH MINISTER WARNS CHINESE TEXTILE IMPORTS MENACE 7,000 MORE JOBS
Received Saturday, 23 April 2005 16:48:00 GMT
PARIS, April 23 (AFP) - A surge in textile imports from China following the end of a global quota system could lead to the loss of an extra 7,000 jobs in France this year, a government minister warns in an interview to be published Sunday.
"All the data we have show a very swift rise in imports from China" of textiles since the end of import quotas on January 1, Industry Minister Patrick Devedjian told the Sunday newspaper Le Journal de Dimanche.
European Union customs statistics published Friday by the European Commission "confirm what France feared: falls in price of up to 47 percent for sweaters, and a market share for Chinese products which has doubled in certain categories, such as brassieres and men's underwear," he said.
"It is a very serious situation. It is very serious for our industries which make these products and have been in difficulty for several years," he added.
"The French textile industry, which employs about 100,000 people, was already losing 10 percent of its jobs each year before the end of quotas," Devedjian said.
"According to a study by the French Fashion Institute that could worsen by at least seven percent a year more, that is 7,000 jobs this year," making a total loss of 17,000 jobs in the sector this year, he said.
"We must launch a safeguard procedure to stagger this state of affairs, as the United States have done."
The EU, which had been waiting for up-to-date figures for Chinese textile exports to Europe, may decide to open an inquiry, the first step towards implementing the safeguard clauses allowed by the World Trade Organisation to protect the European market.
The commission will reveal more this weekend on the surge in Chinese textile imports, a spokeswoman said Saturday.
EU trade commissioner Peter Mandelson, who plans next week to launch the first step in the process which could end in the EU limiting imports, will hold a press conference Sunday, said his spokeswoman.
She declined to give any more details of what Mandelson plans to say Sunday, when he will speak to reporters in Brussels before talks with EU trade ministers at an informal meeting in Luxembourg later in the day.
French Prime Minister Jean-Pierre Raffarin, who is on a vist to China, said Saturday in Shanghai that China was "a responsible actor in the world economy" suggesting it could voluntarily limit textile exports.

Bo Xilai: Boycotting Japanese goods makes no good

Bo Xilai: Boycotting Japanese goods makes no good


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Bo Xilai: Boycotting Japanese goods makes no good
(Xinhua)
Updated: 2005-04-23 00:17


Any prolonged "dispute in political relations" between China and Japan will inevitably hurt bilateral trade and economic co-operation, Minister of Commerce Bo Xilai has said.


Bo Xilai, Minister of Commerce delivers a speak at a forum in Beijing in this March 21, 2005 file photo. [newsphoto/file]
Bo was also quoted on Friday as saying a boycott of Japanese goods will damage the interests of both China and Japan, the Xinhua News Agency reported.

The current state of Sino-Japanese relations, described as "lukewarm on the political front but hot on the economic front," cannot continue indefinitely, he said.

Signs have already emerged that the chill in political links has affected the warmth of economic ties, he added.

For 11 consecutive years up to 2003, Japan was China's top trade partner.

In 2004, the EU and the United States surpassed Japan in terms of bilateral trade volume with China. In terms of investment, the Republic of Korea (ROK) had already made more investment in China than Japan in 2004.

It is regrettable that China and Japan, two close neighbours that are highly complementary in economy, have seen a slowdown in the pace of trade and economic co-operation.

Improvement of Sino-Japanese relations requires joint efforts, Bo said.

"We demand the Japanese side live up to the commitment of squarely facing up to its aggressive history and stop doing things that hurt the feelings of the Chinese people,"

he added, noting the current chilly political relations between the countries was not what either peoples wanted, and that good economic ties are in the interests of both nations.

Bo believes that all generations of the Chinese leadership have placed high importance on developing good-neighborly, friendly and cooperative relations with Japan.

Root of abnormal ties

"The fundamental reason for the abnormal phenomenon of lukewarm political relations between China and Japan lies in the failure of the Japanese side to correctly deal with historical issues," the Minister of Commerce said.

In recent years, the Japanese leader has insisted on paying visits to the Yasukuni Shrine that honors Class-A World War II criminals. In addition, the Japanese government recently gave the green light to the release of history text books glossing over Japan's aggressive past.

"The Japanese side has caused strong dissatisfaction and indignation among the Chinese people with its comments and activities on a series of important issues, repeatedly hurting the feelings of the Chinese people," Bo added, saying this behaviour was the root of the countries' current disagreement.

In contrast to the lukewarm political relations, the two countries economic relations have always been active. Bo said sharing the consensus of strengthening trade and economic co-operation, both countries cherish the hard-won state of mutually beneficial economic co-operation.

In an era of economic globalization, developing economic and trade co-operation, is in the fundamental interests of both sides.

Bo expressed the hope that all sections of Chinese society would proceed considering the long-term interests of the two peoples and jointly safeguard and actively promote the healthy development of trade and economic co-operation between the two countries.

Noting that some have advocated the boycotting of Japanese goods to express their dissatisfaction."

Bo said he hoped people would display their patriotism in a sensible way and work to push forward economic development as both Chinese and Japanese peoples have benefited from bilateral economic and trade relations.

Calculations show Japanese enterprises in China have employed 9.2 million people, and in 2004 they paid taxes of 49 billion yuan (US$5.9 billion). Japanese businesses account for 9.1 per cent of the total taxes paid by the foreign enterprises in China. Japanese investors also benefited from China's economic development in return, he added.

"We don't expect the economic and trade relations between the two countries to be infringed upon," he said.

Because of the importance of Sino-Japanese economic and trade co-operation, Bo strongly urged the Japanese government to deal with the issue and create a favorable environment for bilateral economic and trade relations.

The Chinese Government, he said, has been committed to building a sound environment for foreign investors and will protect the legal rights of all foreign companies in China.

As a responsible country and an important member of the World Trade Organization, China will continue to open-up, reform and promote trade exchanges with all nations.

"Commodities from all nations will have a just treatment in the Chinese market," Bo said, adding "we hope Japanese businesses will do more to further economic and trade co-operation and promote friendship between the two countries."




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Wen NPC 2005

China Internet Information Center
Premier: China Working on Plan for More Flexible Exchange Rate

Chinese Premier Wen Jiabao said in Beijing Monday that China is working on a plan for a more flexible exchange rate of its currency, but the specific measures might come around unexpected.

China started to reform its exchange rate in 1994 and the work has never stopped. The purpose is to establish a market-based, managed and floating exchange rate, Wen said at the press conference held after the conclusion of the annual session of the National People's Conference (NPC), the top legislature.

Wen said what China is doing now is to lay a solid foundation for such a reform. The necessary prerequisites for the reform include, first, macroeconomic stability and growth and second, a healthy financial situation.

Meanwhile, said Wen, China has already taken a series of measures to ease foreign exchange regulation.

Wen said there has been no agreement on what impacts the change of China's exchange rate, or the appreciation of Renminbi, will have on the Chinese economy, Chinese enterprises and neighboring countries and other countries in the world.

Frankly speaking, although some people strongly ask for the appreciation of Renminbi, they don't fully understand the problems arising from the appreciation, Wen said.

China is a responsible country. On the issue of the appreciation of Renminbi and the exchange rate system, China not only considers the domestic interests, but also its possible impacts on neighboring countries and the world, he said.

(Xinhua News Agency March 14, 2005)

Nobel Laureates Warn Against Yuan Revaluation

China Internet Information Center


Two Nobel laureates in Economics have endorsed China's decision not to appreciate its currency, saying it would not be helpful to either China or the United States.



Joseph Stiglitz, former chief economist of the World Bank who was awarded a Nobel Prize in Economics in 2001, mirrored Robert A.Mundell's argument that the political pressure on China to appreciate the yuan conflicts with economic reality.



Some US congressmen have reportedly threatened to impose extra tariffs on Chinese goods if China does not appreciate its currency.



Stiglitz said at a seminar held this week that in the 1980s, the United States had huge trade deficits and that it is natural for politicians to blame somebody else.



"At that time, they blamed Japan," as Japan enjoyed substantial trade surplus with the United States.



"Japan would be very thankful today to China because today China is being blamed." But he said one has to be very clear that the trade deficit with China is not the root of the America's economic problem, which actually results from the imbalance between savings and investment.



"A change of the (Chinese currency) exchange rate will not have a significant effect on that," he said.



China imports goods (raw and semi-processed materials), processes them, and exports them," and the value added is about 30 percent. "When you revalue (appreciation of the Yuan), the cost of imports is reduced."



"The net effect of a 10 percent appreciation of the currency is probably around 3 percent change on the value-added."



"A three percent change on the foreign exchange rate does not have a significant effect" on US trade deficit with China, he said.



Factories are not going to move the production here in China to the United States because of the change, said Stiglitz.



"A revaluation of the Yuan would get political pressure off the back of China for a couple of months," he said.



But the problems of outsourcing, manufacturing, and China's global comparative advantage would not be affected by a moderate change in the foreign exchange rate.



The two Nobel laureates said an appreciation of the Yuan would have adverse effect on Chinese farmers as well as China's bid to narrow the rural-urban income gap.



Stiglitz said an appreciation of the currency could undo some of the progress China has made in reducing poverty in rural areas since it would risk "significantly increasing poverty in the ruralsector."



China does not have a social safety net in place in the event of such an outcome.



(Xinhua News Agency March 26, 2005)

full impact of wto to be felt

China Internet Information Center
Full Impact of WTO Remains to Be Felt


Just because China's financial institutions have not experienced any serious competition since the nation joined the World Trade Organization (WTO) does not mean that this will never come.

In fact, China's financial industry will encounter real challenges from foreign competitors in the coming five to six years.

Domestic financial institutions should not lower their guard, just because they have not experienced much competition over the past three years.

China pledged to gradually open its financial sector to foreign companies upon its WTO accession in late 2001.

Many government departments and research institutions have predicted that foreign banks will seize 15 per cent of China's foreign exchange savings' market and 5 to 20 per cent of the renminbi savings' market five years after the nation's WTO accession.

They are also set to capture more than one-third of China's foreign exchange loans' market and about 15 per cent of its renminbi loans' market.

This means that China's financial institutions will face great challenges from foreign competitors both in terms of profits and personnel.

But the competition faced by foreign financial institutions is currently far from serious.

Foreign financial institutions' market share is also much less than anticipated.

Some foreign institutions have also encountered difficulties on the Chinese market, although they entered the market quickly.

Between February 2001 and July 2002, 22 foreign insurance companies and 30 representative offices pulled out of China.

Some insurance companies, which had previously opened representative offices in different cities across China, thought there was no need to keep open so many offices, something that was proving very costly.

Some other companies also reorganized their China operations as a result of the mergers of their parent firms.

Some firms were also forced to streamline their operations, due to a big drop in their profits following the September 11 terrorist attacks on the United States.

More importantly, some foreign insurance companies found that their lack of awareness of the local market meant that, despite their advanced technology and rich experience, they failed to drum up enough business in China.

The localization of foreign insurance companies, including information collection and product design, could take at least two to three years.

Similar events are taking place in China's banking industry.

Foreign banks had 190 business operations and 214 representative offices in China in 2001, but these figures dropped to 180 and 211 in 2002.

The number of foreign banks to open branches or representative offices in China began to pick up again in 2003 and 2004.

By October 2004, foreign banks had set up 223 representative offices and the same amount of business operations in China, a record level.

These banks' total assets had also increased.

By October 2004, the combined assets of foreign banks were 12 times their 2001 level.

More importantly, foreign banks' profit capability increased greatly.

They reported profits of US$235 million in 2003, an increase of 20 per cent from 2001.

Foreign financial institutions' business expansion in China helped bring vigour to the country's financial market.

This was beneficial in terms of breaking financial monopolies and improving financial efficiency. This was good news for consumers.

Foreign financial institutions' participation in the Chinese market also helped bring in advanced management experience and promote financial renovation.

Foreign financial institutions will also bring challenges for China's financial industry.

The market expansion of these institutions will result in the shrinkage of domestic companies' market share.

The shrinkage of market share and a reduction of quality clients will lead to a decrease in profitability for domestic financial institutions.

For example, domestic banks will be at a disadvantage during competition, because they had heavy historical burdens.

Foreign financial institutions may also pose a considerable threat to domestic companies in terms of core personnel.

Domestic financial institutions should not underestimate the negative impact from their foreign competitors, just because the impact has so far not been felt.

The real challenge will be in the next five to six years.

Facing this challenge, domestic financial institutions should try to solve historical issues through reforms and try to find a way towards sustainable development.

China's four major State-owned banks, the Industrial and Commercial Bank of China, the Agricultural Bank of China, Bank of China and China Construction Bank, ranked 16th, 25th, 15th and 37th among the world's top 1,000 banks.

But the non-performing asset (NPA) rate of the China Construction Bank, whose NPA was the lowest of the "big four," was more than 8 percentage points higher than any banks ranking higher than it.

Despite the central government's injection of US$45 billion in China Construction Bank and Bank of China and the writing off of part of non-performing assets of the "big four", their average NPA remained at 15.62 per cent at the end of last year.

There is not an integrated securities market in China, because shares are divided into tradable and non-tradable ones.

The country's total market capitalization was 3.7 trillion yuan (US$446.5 billion) in 2004, according to figures from the China Securities Regulatory Commission. Tradable shares were only valued at 1.16 trillion yuan (US$140.8 billion).

The ratio of non-tradable stocks to total market capitalization accounted for as much as 68 per cent.

It will also take some time before State shares and shares held by State-owned institutions become tradable.

The separated stock market leads market performers to indulge in greater speculation, bringing with it high risks.

Under these circumstances, State-owned companies are keen to "take money from investors' pockets," while the return on their equity has declined.

Investors tried to make a short-term profit. And some securities firms conducted illegal operations.

But the regulatory body has beefed up its efforts to force unqualified listed companies out of the market.

If the government fails to properly solve these issues, China's financial system will be at risk.

The industry could easily be affected by external factors.

Both the government and domestic financial institutions should regard the opening as a kind of motive force.

Domestic financial institutions' hidden problems should be tackled, while their competitiveness should be improved.

Key attention should be given to solving these fundamental problems.

The sustainable development of China's financial industry will have to be built on the basis of a perfect ownership system and excellent corporate governance.

(China Daily April 4, 2005)

china trade views

China Internet Information Center
Industry, Commerce & Gov't Trade Views

At the Sunday opening ceremony of the first World Industrial and Commercial Organizations (WICO) Summit, Vice- Premier Huang Ju said that industrial and commercial organizations (ICOs) are an important link between enterprises and governments. They are conducive to promoting the multilateral trade system and strengthening cooperation between enterprises in different countries and regions

The summit, initiated by the China Federation of Industrial Economics, is a platform for world (ICOs) to exchange ideas. Over 300 delegates from more than 70 countries are attending.

This will be all the more important as the world economy recovers and the once-deadlocked Doha Development Agenda of the WTO comes back on track, said Dan Christman, senior vice president of the US Chamber of Commerce.

He also said that China will accelerate legislation on ICOs to clarify their legal status. This will enable the best use to be made of their roles in developing industrial standards, promoting international exchanges and mediating trade disputes.

Minister of Commerce Bo Xilai said at the forum opening that China's imports and exports will reach US$1 trillion this year. In 2003, total imports and exports reached US$850 billion, and in the first seven months of this year they grew 38 percent from the same period in 2003.

"With the current development trend, it is estimated that the imports and exports this year will be over US$1 trillion," Bo said.

He pointed out that China needs to import large amounts of goods to satisfy growing domestic demand.

In the past 25 years, the growth rate of imports was 15 percent, 10 percent higher than the worldwide average. With 410 billion dollars of imports from all trading partners, China is the third largest importing country, following the US and Germany.

According to Bo, China will provide high quality and inexpensive goods to the international market while it continues to import large amounts of advanced equipment, high-technology products, raw materials and competitive consumer goods.

Sales of consumer goods and plant and equipment are expected to reach 15 trillion yuan (US$1.8 trillion) in China this year.

The government is placing particular emphasis on encouraging consumption. "Housing, cars, electronic and telecommunication equipment, tourism and education have become new consumption trends in urban and rural families," said Bo.

By 2010, China expects to have 100 million middle-class households, with assets per household valued at more than US$70,000

(China Daily September 20, 2004)

China US business agreeements

China Internet Information Center
China, US Sign Three Business Agreements

China and the United States have signed three business agreements in Beijing.



One of them is Honeywell International's global supply agreement with the Haier Group to provide Honeywell's environmentally friendly refrigerants and other chemical products to Haier.



The other agreement involves cooperation between General Electric Company and the Guangdong Nan-Dian Power Equipment Co. Ltd.



U.S. Commerce Secretary Donald L. Evans said at the signing ceremony that these partnerships will increase American jobs and contribute to America's economic development. They are an example of the strong commercial bonds being forged between the United States and China.



The US has blamed China's inexpensive products for US workers' loss of jobs.



It's also believed that the U.S. Commerce Secretary came to persuade China to have a market-driven exchange rate for the yuan, which is at present pegged to the dollar.



At the beginning of his three-day visit to China, he visited northeast China's Harbin city.



Evans says he is willing to introduce some hi-tech enterprises in the US to Heilongjiang Province to help revitalize the old industrial base.



(CRI.com June 23, 2004)

lifting US trade restrictions China Internet Information Center

China Internet Information Center
Sino-US: Lift Restrictions for a Balanced Trade

China is taking steps to resolve the problem of the trade deficit between China and the United States, and hopes the United States will lift the restrictions on its exports to China so as to expand bilateral trade, a Chinese official said in Beijing on Wednesday.

"We didn't deny there is the trade deficit between China and the United States, and we are making great efforts to resolve the problem by increasing import purchase orders from the United States," said He Yafei, Foreign Ministry director-general of the Department of North American and Oceanian Affairs.

He said the Chinese side also hopes the US side will take measures to loose its restrictions on exports to China. "If those export restrictions are removed, the trade between China and the United States will be greatly increased," He said.

He said with the rapid growth of the Chinese economy, China is facing increasing demands on electricity. As a result, the Chinese government is working on introducing nuclear techniques from foreign countries.

Upon the upcoming China visit of the US Vice President Dick Cheney, He said the Chinese side hopes China and the United States can make progress in import of nuclear techniques.

"Just like Chinese Premier Wen Jiabao said during his US visit at the end of last year, the Sino-US trade deficit should be resolved in a win-win way," said He. "Thus the US side should increase exports to China rather then cut its exports."

According to the director, the Sino-US trade has increased nearly 50 times since 1972 when the two countries established diplomatic ties. During the first two months of this year, US exports to China increased by 52.3 percent over the same period of last year.

In addition, He said the US unemployment problem should not be blamed on China. Analysis by economists from the United States and other foreign countries has shown that the trade deficit with China is not the cause of US job losses, the director added.

The Sino-US trade volume accounts for less than one percent of the US GDP (gross domestic product), which is too low to influence the US economy, said He.

On the Renminbi exchange rate, He said both China and the United States have discussed this issue at all levels.

He said for a long-term view, China will form its currency mechanism based on the market, but at the current stage, any change of China's currency system will influence the Asian finance and economy.

(Xinhua News Agency April 8, 2004)

US trade restrictions China Internet Information Center

China Internet Information Center
China Urges US to Lift Export Restrictions

China is taking steps to resolve the problem of the trade deficit between China and the United States, and hopes the United States will lift the restrictions on its exports to China so as to expand bilateral trade, a Chinese official said in Beijing Wednesday.




"We didn't deny there is the trade deficit between China and the United States, and we are making great efforts to resolve the problem by increasing import purchase orders from the United States," said He Yafei, Foreign Ministry director-general of the Department of North American and Oceanian Affairs.



He said the Chinese side also hopes the US side will take measures to loose its restrictions on exports to China. "If those export restrictions are removed, the trade between China and the United States will be greatly increased," He said.



He said with the rapid growth of the Chinese economy, China is facing increasing demands on electricity. As a result, the Chinese government is working on introducing nuclear techniques from foreign countries.



Upon the upcoming China visit of the US Vice President Dick Cheney, He said the Chinese side hopes China and the United States can make progress in import of nuclear techniques.



"Just like Chinese Premier Wen Jiabao said during his US visit at the end of last year, the Sino-US trade deficit should be resolved in a win-win way," said He. "Thus the US side should increase exports to China rather then cut its exports."



According to the director, the Sino-US trade has increased nearly 50 times since 1972 when the two countries established diplomatic ties. During the first two months of this year, US exports to China increased by 52.3 percent over the same period of last year.



In addition, He said the US unemployment problem should not be blamed on China. Analysis by economists from the United States and other foreign countries has shown that the trade deficit with China is not the cause of US job losses, the director added.



The Sino-US trade volume accounts for less than one percent of the US GDP (gross domestic product), which is too low to influence the US economy, said He.



On the Renminbi exchange rate, He said both China and the United States have discussed this issue at all levels.



He said for a long-term view, China will form its currency mechanism based on the market, but at the current stage, any change of China's currency system will influence the Asian finance and economy.



(Xinhua News Agency April 8, 2004)

Evaluation trade reform China Internet Information Center

China Internet Information CenterEvaluation of China' s Marketization of Foreign Trade

Since the reform and opening-up, China has made great strides toward a market economy in all aspects including its foreign trade. In dealing with antidumping cases, the European and American countries pay special attention to whether die government of an investigated country guarantees the freedom in trading, whether enterprises have the right to decide export quantum according to export market demands, whether they can determine the prices and sales terms of export goads, whether foreign exchange rate calculation is based on market rates, etc. As the case stands, China has made great progress in all these aspects.

Ⅰ.Evaluation of China' s Marketization of Foreign Trade

(Ⅰ) Liberalization of Import and export

1. Lower Customs Tariffs and Standard Deviation of Tariffs

The customs tariffs may reflect the level of market economy of a country to some extent. Customs duties, being a kind of indirect duty, will be shifted to the producers or consumers, and may indicate the intention of a government on controlling foreign trade. Higher duties may lead to higher prices of the imported products, lower the competitiveness of commodities, and prevent the trade of other countries from expanding; while lower duties mean that a government decreases its protection of domestic industries, and recognizes the liberalization of economy.

China has adjusted the customs tariffs for several times. At the beginning of 1992, duties of 225 items of import commodities were lowered. The average tariffs (arithmetic average, hereinafter inclusive) dropped down to 43.2 percent; the next year, the duties of 3371 items of imports were reduced, leading to the average tariffs down to 36.4 percent; in 1995, 4997 items were adjusted, accounting for 76 percent of all import tariffs, with the overall tariffs down to 23 percent; in 1997, the tariffs were again widely reduced, with the average tariffs declining by 6 percentage points to 17 percent. By 2001, the average tariffs of China had been lowered to 15.3 percent.

Meanwhile, the standard deviation of tariffs was introduced to illustrate the actual decline of China' s tariffs. It demonstrates the distribution of tariffs. The smaller it is, the more representative the average tariffs; the bigger, the more distributed the tariffs, the more powerful and protective the policies. The decline of the standard deviation of tariffs from 32.1 percent to 8.73 percent during 1992 - 2001 has indicated that the protection on duties was greatly loosened.

After the tariff reforms, the arrangement of customs nomenclature and the average tariffs are more consistent with the requirements of the WTO.

2. Less Quantity Restrictions on Imports and Exports

The quantity restrictions on imports and exports imposed by China normally consist of quota control, license control, and the measure of operating trade by the State. In the bilateral agreements concluded by China at its WTO accession, to lessen the quantity restrictions is a substantial part. China started to lift the quantity restrictions on imports and exports from 1992, gradually reduced the range of control via quotas and license for imports and exports, and, accordingly, expanded the power of enterprises to import and export.

First, the categories under quota and license control in exportation greatly lessened and open bidding for distributing quotas to promote the competition mechanism conducted. Quota is an important non-tariff barrier; it is a restriction on quantity of imports or exports. In 1992, 227 items of commodities adopted positive quota control for exportation and the value of certificates issued reached some US$41.2 billion, accounting for 48 percent of the aggregate export volume. As the reforms in foreign trade system intensified, by 1997, the number of items under quota control dropped to 114 and the value of certificates issued fell to US$32.7 billion, taking an 18 percent share. In 1998, the commodities under export control of quota and license were again cut down to 91 items with the value of certificates issued dropping to US$27.2 billion, accounting for 15 percent. Then, the commodities under quota and license control dropped to 73 items in 1999; according to the customs statistics, the volume of these commodities was US$16.55 billion, taking up 8.5 percent in the aggregate export volume of US$194.9 billion. In 2000, only 68 items of commodities were still under the control of quotas and license; the customs statistics revealed the volume was US$22.2 billion, accounting for 8.9 percent in the aggregate export volume of US$190.9 billion nationwide. By 2001, the commodities under control dropped to 66 items; the customs statistics revealed the volume was US$20.4 billion, accounting for 7.7 percent of the aggregate export volume of US$266.1 billion nationwide. By 2002, the commodities under license control were reduced to 53 items.

Second, the import quantity restrictions gradually loosened. From 1992, China reduced the number of categories of commodities under quota mad license control. By 1995, commodities under import quota and license control were reduced from 53 items to 36, the headings decreased from 742 to 354. The value of certificates issued totaled US$21.1 billion, accounting for 24 percent in the total import volume of that year. In 2001, only 33 items of commodities were under the control of quota and license. According to the customs statistics, the volume of these import commodities was US$19.8 billion, taking up 8 percent in the aggregate import volume of that year. In 2002, the commodities fell down to 12 items, 170 8 - digit commercial cedes. From January 1, 2002, China abolished the import quantity restrictions on some commodities, such as crude oil, steal products, pesticides, asbestos, laminated plywood, tobaccos, cellulose diacetate tow, sodium cyanide, polyester chip, acrylon, terylen, and some machinery and electrical appliances, mad replaced with voluntary import license control.

Finally, the number of products under designated operation decreased. As per the international practices, China implemented state trading management measures for import and export of the products under designated operation. In accordance with its commitments made for joining the WTO, China altered the former lifelong system for the verified companies. Enterprises that had been operated legally and possessed favorable achievements and powerful force were selected through dynamic adjustment in terms of performance and operation ability to participate in the importation of bulk goods. In 2002, China adopted state trading management measures for the following eight commodities, namely, food, cotton, vegetable oil, sugar, crude oil, product oil, chemical fertilizers and tobacco; at the same time, non-state-owned enterprises were allowed to deal in importation within a certain quantity. In this way, enterprises that actually engage in these commodities were increased; steel products, wool, natural rubber, acrylics and laminated plywood were still under designated operation. These reforms have strongly promoted the reforms in import and export systems and arouse the enthusiasm of enterprises.

3. Increased Dependence on Foreign Trade

The dependence on foreign trade indicates the interdependence between a country's national economy and world economy. It involves the influence of external economy on domestic economy and the influence of domestic economy on external economy. The dependence on foreign trade herein refers to the proportion of the total import mad export volume in GDP. Although the dependence on foreign trade mainly demonstrates the economic growth instead of the degree of marketization, since enterprises in the countries in transition will be endowed with more rights in import and export with the raise in dependence on foreign trade and the loosening of foreign trade control, we hereby analyzed the dependence on foreign trade and the relevant variables.

From 1978 on, both import and export have experienced rapid growth and the growth rate of import and export were higher than that of GDP all along.

From this chart we can see that China' s dependence degree on foreign trade was climbing up all the years, reaching a peak of 44 percent in 2001, including a degree on export of 23 percent and 21 percent on import.

(Ⅱ) Diversification of Foreign Trade Operators

Diversification of trading entities is one of the important symbols for the marketization of foreign trade because it indicates that a country has relaxed its control on foreign trade. The reforms in economic system and trade system have granted many producers with power to engage in import and export and enabled them to break through the monopoly by a few professional foreign trade companies. Foreign trade dealers shall not be exclusively state-owned enterprises any more. Especially after 1992 when it was determined to reform towards market economy, non-state-owned entities took more and more shares in the foreign trade.

In 2001, the export volumes of state-owned enterprises, foreign invested enterprises, collective enterprises and other enterprises were respectively US$113.234 billion, US$133.236 billion, US$14.223 billion and US$5.462 billion.

The proportion of export volume by state-owned enterprises in the total export volume sharply decreased during this period while that by the foreign invested enterprises greatly climbed up. This trend has fully demonstrated the development of foreign invested enterprises in China' s foreign trade. In 1994, the volume of import and export by state-owned enterprises occupied 70.2 percent of the total import and export volume and the other enterprises carved up the remaining 29.8 percent. Till 2001, state-owned enterprises only took 42.6 percent in export. The distribution of aggregate export volume shows that the market competition mechanism has been basically established in foreign trade. The functions of collective and private enterprises as new growth points for foreign trade became more and more prominent. From January to October 2002, the export volume by other enterprises including the collective and private sectors increased by 64.1 percent. They have become potential growth points for China to expand the export. With the softening of market access, more foreign invested enterprises and private enterprises got involved in foreign trade. The market displayed a pattern with various operational entities jointly developing.

(China.org.cn November 7, 2003)

trademarketization China Internet Information Center

China Internet Information Center
Symbol and Degree of Marketization of Domestic Trade

To study the process of China's market-oriented domestic trade, we have to determine indices to be dealt with by combining China's actual condition. Under the traditional planned economy system, the domestic market was divided into several parts, some of which were brought into line with welfare. When reviewing the marketization of domestic trade, therefore, indices ought to be selected from different sides and described from different angles.

(I )Autonomous Trading Entity

The increase of autonomy and independence of trading entities (including enterprises, peasant households, individual businesses and consumers) and the decrease of dependence and reliance on government imply the extent of marketization has been deepened.

Studying trading entities was taken as a primary standard for the extent of development of market-oriented domestic trade, as most trading entities were state-owned circulation enterprises and cooperative enterprises under the traditional planned economy system. Those enterprises were characterized by an intensive administration and a high monopoly without any independence and power to make decision; business scope and commodity circulation determined by the administrative system; a trading method of planned purchase and supply and unified purchase and sale with a nature of "official commerce"; and the power of pricing in government' s hands rather than trading entities'. To judge China' s marketization of domestic trade, a trading entity's operational behavior has to be analyzed, so as to find out whether it makes its own managerial decision and takes full responsibilities for its own profits and losses and to investigate whether its reliance and dependence on government have been weakened or even disappeared.

With the deepening of reform in economy system, the domestic trading entities have gradually shaken off the government control. The following is a main manifestation in this regard: firstly, the traditional state-owned circulation enterprises and cooperative enterprises have been transformed into liability limited companies and joint stock limited companies in line with the provisions of Company Law of the People' s Republic of China, enjoying a full freedom in organizing circulation, determining price and conducting trading activities. Secondly, there are still a great number of individual businesses, who conduct their business strictly in line with market rule. Generally, the average life of such private businesses is comparatively short, while it is easy to for them to change their line of business. In addition, those individual businesses take an unlimited responsibility for their debts. Thirdly, by accumulating assets, some individual businesses have developed into modem trading enterprises with joint equity. Where the traditional state-owned circulation enterprises and cooperative enterprises may not become independent trading entities unless by means of transformation, these newly developed enterprises are autonomous trading entities at the very beginning of their establishment. Fourthly, a new sign accompanied with the reform is foreign capitals ' entry into China ' s domestic trade area, forming trading entities that can compete equally with the domestic enterprises. For example, in the field of retail, we may see such world-known enterprises as Wal-Mart of the U. S, Carrefour of France, Itoyokado & Hot-long of Japan, Pension of Malaya and Metro of Germany.

Table shows the fundamental condition of wholesale, retail, catering services of enterprises above certain specified size classified by type of registration in 2001. In the wholesale trade, the number of state-owned enterprises accounted for 57.7 percent of the total, the number in the retail trade 37.3 percent and the number in catering services 18.7 percent. It is noted that the state-owned enterprises hereby have been transformed towards joint equity companies in conformity with the provisions of Company Law of the People " s Republic of China.

(Ⅱ) Price

Price plays a vital role in a market economy. As an incentive factor impelling the producer to produce commodities demanded by the society, it reflects the degree of scarcity of resources. Moreover, price also serves as a significant bridge for participants in economic activities to exchange information. Due to the decentralized decision-making by the economic entities in market economy, price becomes an automatic signal to coordinate each decision-making entity ' s behavior. Consequently, we may never judge the development of market-oriented domestic trade without price, especially the price formation mechanism.

In the domestic trade, the most obvious sign for marketization is the shift in price formation from government to market, i.e. , price determined by the market supply and demand. Besides the marketization of product price (including means of consumption and production goods), here we can discover the more important the marketization of productive factor price. As inputs of production process, the prices of productive factors like labor, capital and land etc (respectively in the forms of wage, interest, land price and rent etc ) have a direct impact on product price, and their marketization shows that China has made an important step towards market-oriented economy.

For this reason, when studying the marketization of domestic trade, the stress ought to be laid on the proportion of product price determined by the market. As for the measurement of factor price, we can find the details in other relevant chapters. Specifically, the indices selected mainly include: percentage of market-oriented industrial product price in the total sales, and the percentage of market-oriented farm produce price in the total trades.

In China's domestic trade, the commodity price takes three forms: government-valorized price, government-guided price and market-determined price based on various commodities. Government-valorized price means the commodity price and charge standard formulated by price administration authorities and competent business departments above the county level (inclusive ) within the extent of power authorized by the government, mainly involved in key production goods and necessities related to the national economy and the people's livelihood. Government-guided price refers to the product price and charge standard formulated by enterprises under the guidance of price administration authorities and competent business departments above the county level (inclusive) by means of stipulating basic price, floating range, price difference, profit margin, ceiling price and lowest price limit within the extent of power authorized by the government. Market-determined price means the product price and charge standard formulated by the producer and operator, covering the liberalized prices for petty commodities and product prices at country fairs. Government-guided price was formed on the basis of market price.

To be specific, the total percentage of government-valorized price in 2001 accounted for 2.7 percent of total retail sales of consumer goods, 0.5 percent down compared to that in 2000. This decrease contributed to the control over prices of domestic agricultural film materials and pure gold ornaments etc having been lifted, the considerable drop in some drugs' prices, and the cut of items that needed to be approved by the government in pricing and consequently the control over prices lifted at localities. The total percentage of government-guided price accounted for 1.3 percent, 0.3 percent higher than that in 2000. This was mainly owning to the price for partial consumer goods having been shifted from government-valorized to government-guided. The percentage of market-determined price took up 96.0 percent, 0.2 percent higher than that in 2000.

Among the total purchases of farm and sideline products, the total percentage of government-valorized price accounted for 2.7 percent, 2 percent lower than that in 2000. This was resulted from the control over prices of grain in key grain selling areas having been lifted and consequently the percentage of government-valorized price was shrunk. The total percentage of government-guided price took up 3.4 percent, 0.3 percent higher than that in 2000, among which the percentage of central government-guided price 0.1 percent, 0.7 percent down than that in 2000; the percentage of government-guided prices at the provincial level or below 3.3 percent, 1.3 percent up than that in 2000. The main reason for this change was that the central government delegated the power of valorizing silkworm cocoon and sugar to the local authorities for guiding price, resulting in a decrease in the percentage of government-guided price and an increase in the percentage of local government-guided price. The percentage of market-determined price occupied 93.9 percent, 1.4 percent higher than that in 2000.

In the total sales of production goods, the total percentage of government-valorized price took up 9.5 percent, 1.1 percent down than that in 2000, among which the percentage of the central government-valorized price 6.8 percent, 1.1 percent up than that in 2000. The main reason for this change was that after urban and rural areas shared the same price in electricity, the power consumption went up, thus resulting in an increase in the percentage of government-valorized price. The percentage of government-valorized prices at the provincial level or below accounted for 2.7 percent, almost the same as that in 2000. In addition, the total percentage of government-guided price accounted for 2.9 percent, 1.3 percent down than that in 2000, among which the percentage of central government-guided price 2.0 percent, 1.5 percent down than that in 2000; the percentage of government-guided prices at the provincial level o1" below 0.9 percent, 0.2 percent up than that in 2000. This contributed to the control over prices of coal for power generation and natural rubber etc, thus resulting in a decrease in the percentage of government-guided price. The percentage of market-determined price accounted for 87.6 percent , 0.2 percent higher than that in 2000.

It deserves to be mentioned that the provinces and municipalities with 100 percent market-determined price in the total purchases of farm and sideline products in 2000 included Beijing, Tianjin, and Qinghai; while in 2001 there were Beijing, Tianjin, Hebei, Hainan and Qinghai.

By the end of 2001, the categories valorized by the government have been reduced to 13 from 141 in 1992.

In consideration of the above mentioned, the commodities and services valorized by the government only accounted for a small fraction of domestic trade, and the overwhelming majority were market-oriented. The market-determined price was in a dominant position. This shows that the government ought to lay more emphasis on strengthening the legal construction of price, formulating price policies, regulating pricing activities and maintaining market order for fair competition while trying to do a good job in valorization.

( Ⅲ ) Commercialization Rate of Urban Housing

The commercialization rate of urban housing will be enumerated separately to serve as the index for studying the marketization of domestic trade, as under the planned economy system urban housing were distributed in kind to residents as a welfare. The rural housing is not to be discussed here due to the fact that it was basically under market domination, apart from some distributed in the Land Reform Period (from late 1940s to early 1950s). With the speeding up of the reform mad commercialization of housing, the expenses that the resident spends in purchasing housing will see a remarkable increase. Therefore, the research of commercialization rate of urban housing is of great significance in judging the marketization of domestic trade.

For this reason, our selected indices are: the commercialization rate of urban housing and the percentage of urban residents ' housing expenses in their total consumption expenditures etc. An important symbol of file marketization of domestic trade is tile increased commercialization rate of urban housing. This will be explained in two aspects.

Firstly, among the sales of urban dwelling houses, the proportion of urban dwelling houses purchased by individuals has had a notable increase. In 1992, the sold dwelling houses were 38,120,000 square meters, including the dwelling houses purchased by individuals 14,560,000 square meters, accounting for 38.2 percent ; while in 2001 the dwelling houses were 199,380,000 square meters, covering the dwelling houses purchased by individuals 182,500,000 square meters, accounting for 91.5 percent.

Secondly, the percentage of housing expenses that urban residents spend saw a continuous growth in their total consumption expenditures. This means that with the reform of the housing system, urban residents have to take more money out of their pocket to pay housing bills. In 1990, the urban consumption expenditures per head per annum reached 1,278.89 yuan, including the housing expenses 60.86 percent, accounting for 4.79 percent ; in 1995, the urban consumption expenditures per head per annum were 3,537.57 yuan, including the housing expenses 250.18 yuan, accounting for 7.07 percent ; in 2000, the urban consumption expenditures per head per annum were up to 4,998.00 yuan, including the housing expenses 500.49 yuan, accounting for 10.01 percent ; in 2001, the urban consumption expenditures per head per annum reached 5, 309.01 yuan, including the hosing expenses 547.96 yuan, accounting for 10.32 percent . The changes in the years of 1990, 1995, 2000 and 2001 are shown in Figure 6 - 2.

(Ⅳ) Expansion of Private Consumption

Besides the commercialization of urban housing, many fields that used to be recognized as welfare areas (e.g., medical and health care, non-compulsory education etc) have been progressively pushed into market, and the extent of private consumption has been enlarged constantly. These consumptions have a very close relation with the change of labor' s occupation (flow of labor forces) and the development of labor market, as those characterized by welfare may fail to push into market unless labors no longer attach themselves to a single fixed work unit.

In these consumptions, some products pertained to quasi-public goods. When consumers reach the point of congestion, competition emerges. In addition, in other fields of consumptions such as medical and health care, they imply not only a market relation, but also are involved in human health and social civilization. For these masons, when judging the marketization by means of studying the expansion of private consumption, factors other than market also need to be considered. The index we mainly selected here is the increase in expenditures of medical and health care and education for urban residents.

As one of the important aspects in marketization of domestic trade, the percentage of medical and health care expenditures of urban residents in their total expenditures witnessed a continuous increase year after year. In 1993, urban families ' medical and health expenses accounted for 2.61 percent of the total consumption expenditures. In the following years, it remained a constant growth, up to 6.36 percent in 2000 and 6.47 percent in 2001.

Meanwhile, the percentage of tuition mad miscellaneous fees in China's total education funds was also on a continuous increase. In 1991, the ratio of tuition mad miscellaneous fees was 4.42 percent of the total education funds, and 5.06 percent in 1992. In 2000, the ratio hit 15.45 percent. Figure 6- 4 shows the changed condition in the percentage of tuition and miscellaneous fees from 1991 to 2000.

(China.org.cn November 7, 2003)