A Study on China’s Process of Marketization_在线论文查询
The measuring methods also depend on how to interpret marketization and, in the final analysis, on the practice of reform and the progress of marketization. A comparison of various methods measuring the process of marketization reveals that the design of indicators has become more and more detailed and the scope they cover has become increasingly extensive. This phenomenon is in itself a reflection of the constant deepening of China''s economic restructuring and the continuous advance of its marketization process.
II. General Judgment
First, with the deepening of reform, China has been advancing in the direction of marketization and the degree of marketization has become increasingly higher. This is a common conclusion even though there are different methods of measurement (see table 1). Therefore, marketization has been the direction of the economic reform over the past two decades.
Table 1 Measuring Indexes of China''s Marketization Process
Researcher 1980 1990 1992 1994 1995 1996 1997 1999
Lu Zhongyuan & Hu Anganga 62.2%
Jiang Xiaowei & Song Hongxua 37.6%
Research group of State Developmem Planning Commissiona 65%
World Bankb 5.3
Gu Haibinga 5% 35% 40% 50%
Chen Zongsheng et al.a 60%
Economic Liberalization 3.60 3.60 3.50 3.50 3.55
Economic Liberalization
Report of the World 3.2 3.7 5.1 5.3
Data source: See bibliography.
Note: a. The index range is 0-100%. The larger the index value is, the higher the degree of marketization becomes, b. The index range is 0-10. The larger the index value is, the higher the degree of marketization becomes, c. The index range is 1-5. The larger the index value is, the lower the degree of marketization becomes. The original index values were generally two years different from the time when reports were made. So the years should be adjusted by two years accordingly.
Second, a general consensus is that the degree of China''s marketization now is more than 50 percent (see table 1). This is an indication that the market mechanism has been playing a leading role in the country''s ecoriomic life and the country has become a market economy from a planned economy.
Third, the process of China''s marketization is uneven. The degree of marketization differs in different sectors and different regions. Specially, the degree of marketization in the exchange of general commodities is relatively high, and that in the exchange of production factors is relatively low. The degree of marketization in the financial sector is the lowest. The process of marketization in the eastern region is faster, while that in the west region is slower.
Fourth, in international comparison, the degree of China''s marketization is considerably lower than that in the developed countries and regions, at the middle level among the countries in the process of reform and economic transition, and higher than that in some major developing countries. China''s ranking has been in an upward movement (see table 2). This is another indication that the degree of China''s marketization has been rising since the beginning of reform and its achievements in the market-oriented economic restructuring
A Study on China’s Process of Marketization have been recognized in the world.
Table 2 China''s Ranking in the International Comparison of Economic Liberalization
1980 1985 1990 1995 1998 1999
Economic Liberalization Index Ranking 77 100 114
Total 101 161 155
Economic Liberalization of the World Ranking 101 82 101 91 81
Total 107 111 115 122 123
Data source: See bibliography
Fifth, China has not completed the process of marketization. In the future, the process of marketization in the sense of reform is likely to be basically completed in 2010. Realizing the marketization in the sense of modernization is still a long and arduous task.
III. Specific Analyses
(1) Marketization of the exchange of general commodities
Mark pricing of commodities is a key to the marketization of the exchange of general commodities. In 1979, state pricing accounted for about 97 percent of the total commodity retail sales, 92.6 percent of the total purchase of farm and sideline products and 100 percent of the total industrial production factors sales. Correspondingly, market pricing respectively accounted for 3 percent, 7.4 percent and 0 percent. We can see that commodity prices were set at that time according to a typical planned pricing mechanism. Therefore, the degree of marketization was very low. By the year of 1990, market pricing accounted for 53.0 percent, 51.6 percent and 36.4 percent of the total commodity retail sales, the total purchase of farm and sideline products and the total production factors sales. After the goals for a socialist market economy were set in 1992, price setting was liberalized at an accelerated rate. The above indexes rose rapidly to 93.2 percent, 81.8 percent and 73.8 percent respectively. Later on, market pricing continued to assume growing proportions. In July 2001, the central government decided to further liberalize the setting of commodity and service prices, limiting government pricing to only 13 categories from 141 categories in 1992. It was estimated that after this price liberalization, market pricing would account for more than 90 percent of the purchase and circulation of farm products and production factors. At present, with the exception of a few important commodities vital to the national economy and people''s livelihood, a few products characterized by resource monopoly and some services, the prices of all the rest have been liberalized and regulated independently by market. This is an indication that a pricing mechanism based on market regulation is already in place.
In view of the above changes in pricing and in reference to the proportion of the participation by non-state-owned economy and other indicators, China''s marketization of the exchange of general commodities has reached a very high level (see table 3). Based on the above achievements and the progress in price marketization, we can say that the degree of China''s markefization in the exchange of general commodities is above 70 percent. This is an important sign that a socialist market economy in a preliminary stage is already in place.
Table 3 Estimated Degree of China''s Marketization of the Exchange of General Commodities
Researcher Year Indicator Estimated result(%)
Lu Zhongyuan & Hu Angang 1992 Price marketization index 81.8
Jiang Xiaowei & Song Hongxu 1994 Domestic market openness 82.8
Development Planning Commission 1994 Degree of commodity
market marketization 80
Gu Haibing 1996 Price marketization 60
Chen Zongsheng et al. 1997 Degree of commodity
market marketization 85
Data source: See bibliography.
(2) Marketization of production factors
Compared with the marketization in the exchange of general commodities, the marketization process in the exchange of production factors has been slower. Various estimates indicate that the degree of production factors marketization is less than 50 percent (see table 4). The development of different production factors markets is uneven. The marketization of labor and technologies is higher. However, the assessment of the labor marketization cannot be optimistic because the urban and rural labor markets are seriously separated from each other.
Table 4 Estimated Degree of China''s Production factors Marketization
Researcher Year Indicator Estimated
result (%)
Lu Zhongyuan & Hu Angang 1992 Investment marketization index
Production marketization index 71.70
45.39
Jiang Xiaowei & Song Hongxu 1994 Enterprise liberalization
Market openness to outside world 42.8
16.2
Research group of State Development Planning Commission 1994 Degree of production factors marketization
Labor market
Capital market 50
70
28
Gu Haibing 1996 Labor marketization
Capital marketization
Production marketization 35
40
55
Chen Zongsheng et al. 1997 Marketizafion of industrial & commercial enterprises
Marketizatio of labor market
Marketization of financial market
Marketization of real estate market
Marketization of technology market 48
65
10
40
71
Data source: See bibliography.
It is noteworthy that many studies indicate financial marketization is at a very low level. In recent years, China has made important progress in financial reform and therefore it is necessary to further analyze the degree of financial marketization. Table 5 indicates that monetization of Chinese economy has been high and capitalization of the economy has drastically increased thanks to the rapid development of the stock market. In the meantime, important steps have also been made in interest rate marketization. A nationwide inter-bank market has been preliminarily established; the inter-bank interest rate has become an increasingly true reflection of the supply and demand on the market funds and also a most influential indicator of the financial market; the treasury bonds are issued through marketized bidding. Of course, the marketization of China''s specialized banks has just begun, and the securitization of Chinese economy is still at a very low level (the combination of the total market value of stocks and the value of securitized debts in the developed economies is on average two times of the GDP). In an overall term, the development of the financial market is lagging behind. But we should say that as China''s financial market has already had a rough framework and a foundation for further development, the financial marketization should not be underestimated.
Table 5 Development of China''s Financial Market
Year Currency supply (M2) Total market value of stocks (S) Year-end balance of bonds
(B)
M2 (100m yuan) M2/GDP S (100m yuan) S/GDP B (100m yuan) B/GDP
1996 76095 112% 9842 14.5% 7380 11.0%
2000 134610 151% 48091 53.8% 14536 16.5%
Data source: China Statistical Yearbook, 2001
(3) Marketization in China''s Different Regions
China is&nb
A Study on China’s Process of Marketizationsp; a large developing country and as such the process of marketization is uneven among different provinces, municipalities and autonomous regions. In a regional term, the process of marketization in the eastern region is visibly faster than that in the central and western regions. This has been proven by various studies. To indicate the specific conditions of the provinces, municipalities and autonomous, we list the following two sets of research results for comparison and reference (see table 6). The drastic disparity of marketization between different regions is both a manifestation of the uneven process of China''s marketization and an indication that the process of building a unified China market is far from being completed.
Table 6 Marketization Indexes of China''s Provinces, Municipalities and Autonomous Regions
1999 (Fan Gang et al.)a
Region Rank Points Region Rank Points
Guangdong 1 8.33 Anhui 16 5.40
Zhejiang 2 8.24 Sichuan 17 5.29
Fujian 3 7.28 Guangxi 18 5.28
Jiangsu 4 7.04 Jiangxi 19 5.12
Hebei 5 6.70 Shanxi 20 4.57
Shanghai 6 6.59 Jilin 21 4.51
Tianjin 7 6.58 Shaanxi 22 4.48
Beijing 8 6.30 Gansu 23 4.02
Shandong 9 6.22 Heilongjiang 24 3.97
Hunan 10 5.99 Guizhou 25 3.86
Henan 11 5.97 Inner Mongolia 26 3.45
Hainan 12 5.65 Yunnan 27 3.39
Liaoning 13 5.60 Xinjiang 28 2.90
Chongqing 14 5.57 Ningxia 29 2.69
Hubei 15 5.53 Qinghai 30 2.00
1995 (Chen Zongsheng et al.)b
Regon Rank Points Region Rank Points
Beijng 1 0.85 Hunan 16 0.29
Shanghai 2 0.62 Shaanxi 17 0.28
Guangdong 3 0.50 Henan 18 0.27
Tianjing 4 0.49 Guangxi 19 0.26
Liaoning 5 0.43 Yunnan 20 0.25
Hunan 6 0.41 xinjiang 21 0.25
Zhejiang 7 0.40 Ningxia 22 0.23
Jilin 8 0.38 Sichuan 23 0.23
Jiangsu 9 0.38 Jiangxi 24 0.23
Fujian 10 0.36 Inner Mongolia 25 0.21
Shandong 11 0.32 Anhui 26 0.21
Hubei 12 0.32 Qinghai 27 0.20
Heilongjiang 13 0.31 Gansu 28 0.20
Hebei 14 0.30 Tibet 29 0.18
Shanxi 15 0.30 Guizhou 30 0.13
Data source: See bibliography.
Note: a: The indicator is a relative indicator, ranging from I to 10. The greater the value is, the higher the rank indicating the degree of marketization becomes; b: The indicator is an absolute indicator, ranging from 0 to 1. The greater the value is, the higher the degree of marketization becomes.
Government role is undoubtedly an extremely important factor in the process of marketization. The study on the change of government functions should be one of the basic components of measuring the process of marketization. There have been some studies in this respect in China. But the design of indicators seemed to be not so complete and deep-going. In this area, we should draw on the relevant foreign studies.
(4) International Comparison
International comparison of the degree of marketization now is generally using economic liberalization as the standard of measurement. Economic liberalization means that the government liberalizes prices, trade and market access so that these activities are not subject to the direct control of the state. Economic liberalization is theoretically controversial and is not extensively recommended in practice. In addition, the existing assessment also contains some elements of political prejudice. But economic liberalization highlights the assessment of the government roles in market and the legal environment for market, which are &
A Study on China’s Process of Marketizationnbsp;precisely the important contents of analyzing the process of marketization under the conditions of reform and transition. Therefore, using economic liberalization for international comparison can help broaden the horizons of marketization studies and supplement the analyses we discussed earlier.
Internationally, there are two -kinds of famous studies on the degree of economic liberalization. One is the Economic Liberalization Index jointly compiled by the America Heritage Foundation and the Wall Street Journal. The other is the Annual Report on Economic Liberalization of the World published by Canada''s Frazer Institute. The value of the former index ranges from I to 5. The smaller the value is, the higher the economic liberalization becomes. The data used normally are two years before the report year. Therefore, we should adjust the year of the index values accordingly so that comparison is more convenient. The value of the latter index ranges from 0 to 10. The greater the value is, the higher the economic liberalization becomes.
Let''s see the estimates about China''s economic liberalization (see table 7). The Economic Liberalization Index report believes that China''s foreign&n
